APAC Economic Comment: Philippines: Oil reprieve, but risks linger

研报英文原文证据摘录

APAC Economic Comment: Philippines: Oil reprieve, but risks linger

rly

business sentiment. With the BSP having raised rates by 50bp so far, financing

conditions have tightened. Credit growth is expected to decelerate further, with

businesses likely having front-loaded borrowing earlier. As a result, both lending and

private investment should moderate. While the labour market remains broadly stable,

real income pressures are expected to weigh on consumption. (See charts overleaf)

After bottoming at 2.8% y/y in Q1, growth is expected to remain subdued in Q2 (UBSe:

2.9%), before gradually improving to 3.3% in Q3 and 4.1% in Q4. This remains well

below the estimated trend growth of around 6%. The modest recovery is likely to be

driven primarily by improved budget execution, supporting infrastructure spending and

government consumption. With the Q1 fiscal deficit at 5.0% of GDP, below the 5.3%

full-year target, there is some scope for stronger public spending, although execution

will be critical. Net exports are likely to remain a limited growth driver, reflecting the

Philippines’ relatively lower integration into the global AI and tech cycle. However,

services exports—particularly BPO-related activity—and tourism should continue to

provide some resilience.

Downside risks from El Niño could have a larger impact on the Philippines

Weather-related risks remain significant. A potential super El Niño could weigh on both

growth and inflation, particularly through higher food prices—especially rice, which has

a short sowing-to-harvest cycle of around 12 weeks and is highly rain-dependent. These

risks are especially acute for the Philippines for several reasons:

High food weight in CPI: Food accounts for close to 35% of the CPI basket (versus

~30% in Asia on average).