MANILA, Philippines — Economists said the slower-than-expected economic growth in the third quarter has given the Bangko Sentral ng Pilipinas (BSP) more room to pause its tightening cycle.
Nicholas Mapa, senior economist at ING Bank Manila, said calls for the central bank’s Monetary Board to keep interest rates steady on the next rate-setting meeting on Nov. 15 continue to mount.
“The disappointing growth print may give some ammunition for the doves to call for a pause at next week’s Monetary Board meeting. The 150 basis point cumulative rate hike for the year is likely weighing down on consumption and will dampen investment going forward,” he said.
The BSP has jacked up benchmark rates by 150 basis points in four straight rate-setting meetings to curb rising inflationary pressures and at the same time boost the peso.
“Holding off on an additional rate hike, as marginal as it may be, would give the Philippine economy the breathing room it needs to catch its breath and resume its above six percent growth trajectory in the fourth quarter with the mid-term election in sights,” Mapa said.
The country’s GDP grew 6.1 percent in the third quarter, slower than the revised 6.2 percent booked in the second quarter and the 6.6 percent in the first quarter. It was lower than the market forecast of 6.2 percent and the 6.5 percent projection of the Department of Finance (DOF).
“With the 6.1 percent print, the likelihood for a stay has increased with recent dovish undertones from key voting BSP officials likely to pick up as slowing consumption is now a concern according to the government,” Mapa said.
This brought the GDP growth in the first nine months of the year to 6.3 percent, still lower than the revised 6.5 to 6.9 percent target set by the economic managers.