Manila – BMI, a unit of Fitch Solutions, has projected that the Philippines will reach its inflation target of 2 to 4 percent by 2024, supporting the country’s economic growth in the coming year. In a commentary released on Tuesday, BMI predicted that the country’s inflation rate for this year would stand at 4.7 percent before settling within the Bangko Sentral ng Pilipinas’ (BSP) target range in 2024.
According to Philippines News Agency, BMI, the anticipated reduction in inflationary pressures over the next few months will offer relief for real household incomes and bolster private consumption, which is crucial for further expansion of the gross domestic product (GDP) in 2024. BMI forecasts a GDP growth of 6.2 percent for the Philippines in 2024, an increase from its projection of 5.7 percent for this year. This upward revision follows the country’s better-than-expected economic performance in the third quarter of the year, driven by a sharp increase in government spending.
However, BMI cautions that high interest rates are expected to limit investment activity in the near term. The central bank is predicted to raise rates by another 25 basis points in the upcoming monetary board meeting. BMI also anticipates that the BSP will only start reducing rates in the second half of 2024, aligning with expectations for the US Federal Reserve. The outlook for the Philippines, BMI, largely depends on the global economic climate, particularly the performance of the US and Chinese economies, which could significantly influence Philippine exports.