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Manila Bulletin devider Business devider The Economy devider DBS sees faster Philippine growth in Q1

DBS sees faster Philippine growth in Q1

Published May 5, 2025 02:32 pm

Singapore-based DBS Bank Ltd. expects a "resilient" first-quarter economic growth for the Philippines amid easing domestic inflation, despite global uncertainties wrought by the United States' (US) tariff spree.

In a May 5 report, DBS Group Research chief economist Taimur Baig and senior economist Tieying Ma forecast gross domestic product (GDP) growth to have picked up to 5.6 percent in the first quarter, from the revised 5.3 percent in the previous quarter.

The bank also projected lower headline inflation of 1.6 percent in April, further down from the nearly five-year low of 1.8 percent last March.

The Philippine Statistics Authority (PSA) will report on April consumer price index (CPI) inflation on Tuesday, May 6. Its first-quarter GDP report will be released on Thursday, May 8.

For inflation, "moderation in the food segment led by rice, fish, fruits, and vegetables, favorable domestic supply conditions along with lower oil prices were likely behind the downmove, besides a firmer peso" last month, DBS said.

DBS had forecast the Philippine peso to trade against the US dollar at the ₱56:$1 level during the second quarter, before appreciating to ₱55.8 versus the greenback in the third quarter and further strengthening to ₱55.5 by the fourth quarter.

However, "there are also forces that will prevent a deeper pullback in the headline [April inflation], including higher utility rates and transport fares," DBS added, citing the increase in Light Rail Transit Line 1 (LRT-1) fare.

For the entire year, DBS had estimated a lower average inflation rate of 2.6 percent, within the government's two- to four-percent target band of annual goods and services price increases deemed conducive to economic growth.

As such, DBS expects the Bangko Sentral ng Pilipinas (BSP) to be "likely [looking] at the inflation trend, while growth is set to recover."

DBS sees the BSP cutting key interest rates by an additional 25 bps each in the second and third quarters, meaning the June and August meetings of the policy-making Monetary Board. As such, from a policy rate of 5.5 percent at present, DBS anticipates a reduction to five percent by year-end.

Despite expectations of faster first-quarter GDP growth, DBS had projected full-year 2025 expansion at 5.8 percent, below the government's more ambitious goal of six to eight percent.

Related Tags

DBS Bank Ltd. inflation rate gross domestic product (GDP) growth Philippine Statistics Authority (PSA)
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