BMI Research raises growth outlook for Philippines, but cautions on overheating

MANILA, Philippines — Amid concerns of overheating, Fitch’s BMI Research unit upwardly revised its growth outlook for the Philippines, although the country’s economy is seen slowing down over the next quarters.

“On the back of a stronger-than-expected real gross domestic product growth performance in Q118, we have raised our real GDP growth forecast for 2018 to 6.5 percent, from 6.3 percent previously,” BMI said in a report.

“However, we are sticking to our view that economic growth is likely to moderate over the coming quarters,” it added.

If realized, BMI’s latest growth estimate would miss the government’s 7-8 percent full-year target range.

Meanwhile, BMI cautioned that even as the Philippines continues to enjoy positive demographics, the economy is showing signs of overheating, or expanding at an unsustainable rate.

The Fitch unit also said it expects the deterioration in the business environment to weigh on private investment.

In the first quarter of 2018, the Philippine economy grew 6.8 percent, faster than the downwardly revised 6.5 percent in the preceding three months and the 6.4 percent expansion rate in the comparable period last year.

The latest growth pace matched market estimates, but settled near the low-end of the government’s full-year goal due to “spoiler” inflation, Socioeconomic Planning Secretary Ernesto Pernia said.

“If not for the first quarter 2017-2018 increase in inflation rate, real GDP growth could have been well within our growth range target,” Pernia said. — With a report from BusinessWorld