The Asian Development Bank (ADB) has lowered its inflation forecast for the Philippines due to moderating price pressures, particularly in food and core inflation.
In its latest Asian Development Outlook (ADO) report, the Manila-based multilateral institution revised its inflation forecast for the country downwards to 3.3 percent for this year, from an earlier projection of 3.6 percent,
The ADB attributed the easing inflation to the reduction in rice import tariffs and moderate core inflation.
"The reduction in rice import tariffs from June 2024 helped to contain food inflation," the ADB said.
Food inflation was 3.5 percent in November, averaging 4.6 percent in the first 11 months. Core inflation has also been moderate, averaging 3.0 percent during the same period.
ADB said inflation is expected to remain within the Bangko Sentral ng Pilipinas’ (BSP) 2.0 percent to 4.0 percent target. Policy rates were already cut by a total of 50 basis points in August and October 2024.
Meanwhile, the ADB maintained its growth forecast for the Philippines for 2024 and 2025.
The country’s economy, as measured by the gross domestic product (GDP), averaged 5.8 percent in the first three quarters, driven by household consumption and investment.
"Moderating inflation and monetary policy easing should continue to support growth," the ADB added.
On the supply side, the services sector, construction, and manufacturing are contributing to overall growth.
The Philippines Manufacturing Purchasing Managers’ Index (PMI) remained above the 50 threshold at 53.8 in November, the highest in over two years.
Public infrastructure projects and brisk private construction continue to boost growth.
On Wednesday, the ADB said also that the Asia-Pacific economies are expected to maintain steady growth this year and next, but potential policy changes under the new U.S. administration could create challenges.
The ADB projects developing Asia and the Pacific will grow by 4.9 percent in 2024 and 4.8 percent in 2025.
"Strong overall domestic demand and exports continue to drive economic expansion in our region," said ADB Chief Economist Albert Park in the statement.