A surprise slowdown in the Philippine economy has triggered calls for the central bank to go easy on interest rate increases, and for President Ferdinand Marcos Jr. to do more to revive growth.
Economists from China Banking Corporation, Metropolitan Bank & Trust Co., Union Bank of the Philippines and Pantheon Macroeconomics have raised the possibility that the Bangko Sentral ng Pilipinas (BSP) will pause its rate hikes, after economic growth last quarter decelerated to the weakest since the pandemic.
“It sure doesn’t make much sense to slam hard on the brakes if we’re driving uphill on rocky terrain,” Metropolitan Bank Chief Economist Nicholas Mapa said.
Resurgent inflation due to the protracted Iran war and farm damage from monsoon rains have further strained the consumption-driven, import-dependent economy that’s already falling behind most of its Southeast Asian neighbors. Household spending, a key economic pillar, remained tepid and weighed on a swathe of industries from retail to real estate.
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