The Japan Center for Economic Research (JCER) maintained its growth prospects for the Philippines this year as optimism for a better fourth-quarter persists despite the slow pace of the vaccination program.
JCER kept its gross domestic product (GDP) growth forecast at 4.3 percent for 2021, the same figure it had in the June survey round.
The Tokyo-based think tank’s latest forecast now falls within the government’s revised GDP growth target of four to five percent for the whole year. The economy is coming off a 9.6 percent contraction in 2020.
“Some economists still forecast positive growth in the third and fourth quarter,” principal economist Masashi Uehara said in JCER’s latest survey.
JCER’s quarterly survey collects insights from economists and analysts in the five biggest economies in the Association of Southeast Asian Nations (ASEAN 5) – Indonesia, Malaysia, the Philippines, Singapore and Thailand – and in India.
“Among risks other than corona shock, repercussions of US monetary policy make the top five in many countries. It ranks as the number two risk in the Philippines and India, number three in Indonesia, while also scoring fourth in Malaysia,” Uehara said.
Just last month, the US Federal Reserve announced that it may decide to taper quantitative easing in November, and Fed policymakers expect an interest hike by next year.
Such a move may lead to the depreciation of Asian currencies against the US dollar.
Meanwhile, inflation concern is also hounding the Philippines and is expected to remain elevated for the remainder of the year.
JCER’s survey showed that headline inflation in the country will likely reach 4.1 percent, significantly higher than the ASEAN’s 1.2 to 2.3 percent range.
Its retained forecast for the Philippines is still above the Bangko Sentral ng Pilipinas’ target of 4.4 percent for 2021. Oil prices are still on an upward movement while commodity prices are reflecting the same pressures.