Philippine Consumer Demand Expected to Remain Subdued
Jayson 29 Jul 2024 08:08
"Consumer demand in the Philippines is more subdued amid rising interest rates (policy rate at 6.5%) and weak consumer sentiment," S&P said in its monthly emerging markets (EM) summary.
To curb inflation, the Bangko Sentral ng Pilipinas (BSP) has kept its benchmark rate at a 17-year high of 6.5% from October 2023.
"Consumer demand in emerging Asia remains generally stable, but opposing forces are at work. On one hand, tight monetary policy and spillovers from last year's slower growth are holding back demand," the report said.
"On the other hand, a resilient labor market and a recovery in tourism are supporting consumer activity."In the first quarter, Philippine gross domestic product (GDP) grew at a weaker-than-expected 5.7%. Household spending, which accounts for about three-quarters of economic growth, grew 4.6%. This was the slowest pace of growth since a 4.8% decline in the first quarter of 2021.
"We observe slower long-term GDP growth in some emerging markets, mainly due to slower labor productivity and fixed investment," S&P Global said.
S&P Global expects GDP growth in the Philippines to average 5.8% this year, below the government's target.
To curb inflation, the Bangko Sentral ng Pilipinas (BSP) has kept its benchmark rate at a 17-year high of 6.5% from October 2023.
"Consumer demand in emerging Asia remains generally stable, but opposing forces are at work. On one hand, tight monetary policy and spillovers from last year's slower growth are holding back demand," the report said.
"On the other hand, a resilient labor market and a recovery in tourism are supporting consumer activity."In the first quarter, Philippine gross domestic product (GDP) grew at a weaker-than-expected 5.7%. Household spending, which accounts for about three-quarters of economic growth, grew 4.6%. This was the slowest pace of growth since a 4.8% decline in the first quarter of 2021.
"We observe slower long-term GDP growth in some emerging markets, mainly due to slower labor productivity and fixed investment," S&P Global said.
S&P Global expects GDP growth in the Philippines to average 5.8% this year, below the government's target.
