Today, the World Bank will hold a news conference on the Philippines’ economic outlook.
Citing rising inflation, higher US interest rates and trade tensions between Washington and Beijing, the International Monetary Fund (IMF) lowered its economic growth forecast for the Philippines last week from 6.7% to 6.5% for the remainder of the year.
With an additional hike of 50 basis points last week–bringing interest rates to 4.5%–the Philippines’ central bank has raised rates 150 total basis points since May to cool the country’s economy, which has been plagued by rising consumer prices and a falling currency. Still, inflation is expected to settle between 6.8% and 7% for September, the highest projection since 2009.
In the short term, expect Manila to address mounting inflation by tightening fiscal policy, which could include cuts to non-priority spending. Likewise, another rate hike before the year’s end could be in the cards. Regardless, steady GDP growth, expected to remain around 7%, and strong domestic demand buoy the country’s favorable medium-term outlook.
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Max is Foreign Brief's Chief Executive Officer. A Latin America specialist, Max is an expert in regional political and economic trends, focusing particularly on the Southern Cone.