Philippines Economic Forecast

Philippines Economic Outlook

March 20, 2018

Data for the first quarter indicates economic activity continued to expand robustly. In January, annual growth in retail sales picked up pace, suggesting private consumption continued to lead growth, supported by a strong labor market, rising remittances and a sustained expansion in consumer credit. Households are also benefiting from increased disposable income from the income tax cuts contained in the Tax Reform for Acceleration and Inclusion (TRAIN). In the same month, exports rebounded, albeit timidly, and manufacturing output expanded healthily. However, PMI readings show that the manufacturing sector could be seeing some weakness as it is restrained by higher excise taxes on various goods under TRAIN. Concerns over the transitory impact of TRAIN on consumer prices and thus on consumer demand also drove business confidence to decline somewhat in Q1, although it remained broadly optimistic. Data for the first two months of 2018 shows a jump in tax collection due to TRAIN, which will translate into higher resources for infrastructure plans.

Philippines Economic Growth

Rising infrastructure spending alongside the government’s “Build, Build, Build” strategy and sustained credit growth will lead fixed investment to expand strongly this year. Additionally, household spending should benefit from lower income taxes, rising remittances and a solid labor market. However, if inflation increases more than expected and the Central Bank hikes rates to curb inflationary pressures, the increase in consumer spending could be negatively affected. FocusEconomics panelists see GDP growth of 6.6% in 2018, unchanged from last month, and 6.5% in 2019.

Philippines Economy Data

Population (million)96.598.2-  -  -  
GDP per capita (USD)2,5922,768-  -  -  
GDP (USD bn)250272-  -  -  
Economic Growth (GDP, annual variation in %)6.77.1-  -  -  
Consumption (annual variation in %)6.65.6-  -  -  
Investment (annual variation in %)10.811.8-  -  -  
Manufacturing (annual variation in %)5.410.3-  -  -  
Retail Sales (annual variation in %)2.12.7-  -  -  
Unemployment Rate7.07.1-  -  -  
Fiscal Balance (% of GDP)-2.3-1.4-  -  -  
Public Debt (% of GDP)51.549.2-  -  -  
Money (annual variation in %)9.433.5-  -  -  
Inflation Rate (CPI, annual variation in %, eop)3.04.1-  -  -  
Inflation Rate (CPI, annual variation in %)3.22.9-  -  -  
Inflation (PPI, annual variation in %)1.11.6-  -  -  
Policy Interest Rate (%)3.503.50-  -  -  
Stock Market (annual variation in %)33.01.3-  -  -  
Exchange Rate (vs USD)41.0644.39-  -  -  
Exchange Rate (vs USD, aop)42.2142.46-  -  -  
Current Account (% of GDP)2.84.2-  -  -  
Current Account Balance (USD bn)6.911.4-  -  -  
Trade Balance (USD billion)-10.0-5.7-  -  -  
Exports (USD billion)52.156.7-  -  -  
Imports (USD billion)62.162.4-  -  -  
Exports (annual variation in %)7.98.8-  -  -  
Imports (annual variation in %)2.60.5-  -  -  
International Reserves (USD)83.883.2-  -  -  
External Debt (% of GDP)32.028.9-  -  -  

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Philippines Facts

Bond Yield6.22-4.11 %Apr 17
Exchange Rate52.080.02 %Apr 17
Stock Market7,7230.66 %Apr 17

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