Budget Secretary Benjamin Diokno said yesterday the government would not be able to reach this year’s 7-8 percent economic growth target, due to stubbornly high inflation that’s denting consumption.
In a television interview, Diokno said the economy would probably grow between 6.7 and 6.9 percent this year, which would keep the Philippines as one of the Asia’s fasting growing nations.
In the second quarter, annual growth slowed to a near three-year low of 6.0 percent. The economy’s outlook remains clouded by the increasing Philippine inflation rate, volatile capital flows and global trade tensions.
The International Monetary Fund and the Asian Development Bank have trimmed their 2018 growth forecasts for the Philippines. The IMF expects 6.5 percent expansion while the ADB foresees 6.4 percent.
Diokno insisted the inflation rate should start to ease in the current quarter as measures to address food supply constraints kick in, with higher imports of rice, meat and fish.
Inflation “will be back to 2-4 percent next year,” Diokno told news channel ANC referring to the central bank’s target range.
In September, the annual inflation rate likely was around 6.8 percent, the central bank said on Friday. That would be the highest level since February 2009, reflecting costlier fuel and food prices as well as the weaker peso.
Inflation in August hit 6.4 percent, the highest since March 2009 and the sixth consecutive month in which the pace exceeded the 2-4 percent target.
To contain inflationary pressures and support the struggling peso, the Bangko Sentral ng Pilipinas has raised interest rates a total of 150 basis points since May. It has left the door open to further tightening. (Reuters)