BSP sees ‘maintained’ growth for Philippine economy amid inflation, high interest rates
MANILA, Philippines — The Bangko Sentral ng Pilipinas on Thursday said it expects a steady growth for the Philippine economy in the third quarter, as inflation and higher interest rates drag consumer spending.
“For the third quarter at least we see the growth numbers to be maintained from the second quarter numbers,” BSP sector-in-charge Francisco Dakila Jr. said at a press conference.
“Now, once the infrastructure program of the government kicks into place, that can also provide further impetus to growth,” Dakila added, referring to the Duterte administration’s P9-trillion “Build, Build, Build” program.
On Thursday, monetary officials delivered a fresh round of rate hike, as expected, completing their most aggressive policy action yet to fend off inflation in 18 years.
READ: BSP raises interest rates anew; expects above-target inflation until 2019
Higher interest rates discourage people from borrowing money and from spending, causing a decline in demand which, in turn, tempers inflation and can even slow down the country’s economic growth.
Gross domestic product—or the value of all finished goods and services produced in the country—sharply eased to a three-year low of 6.0 percent in the second quarter.
In the first half of 2018, the economy grew 6.3 percent, falling below the government’s 7-8 percent goal.
Philippine policymakers have been concerned about rising inflation, which rose to a nine-year high of 6.4 percent in August.
Some analysts expect economic growth to continue to decelerate over the second semester of the year as tighter monetary policy and higher inflation weigh on consumer spending, which accounts for about seven-tenths of the Philippine economy. — Ian Nicolas Cigaral
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