Officials in the Philippines will release the country’s economic growth figures for the three months to June. Analysts in the country say they expect an annualised growth rate of 7%, citing increased public spending on infrastructure, manufacturing output and tax revenues. Moody’s, however, is projecting a more conservative rate of 6.6%—a slight slowdown from the first quarter.
Since President Rodrigo Duterte took power in June of 2016, the Philippines GDP has increased substantially from 6.1%. The leader has brought on a 19% increase in government revenue by lowering income taxes in exchange for higher levies on oil and sugar. But disposable income has fed demand-pull inflation, which has soared to 5.7%, in July (a 2% increase since January).
As a result, it is likely that the Central Bank—which is also meeting today—will intervene by raising interest rates from 3.5% to 4% to curb inflation. Because the issue of inflation has risen over Duterte’s Presidency, the people have attributed rising prices to his new tax bill which serves to fund his $180 billion transport infrastructure scheme: “Build, Build, Build”. Expect the country’s ability to address this inflation to shape Duterte’s popularity come the 2019 election.
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Sophie provides analysis on issues on politics and strategy, with a particular focus on the Asia Pacific.