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UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the recently published GDP figures in the Philippines.

Key Quotes

“The Philippines’ real GDP growth jumped to 6.4% y/y in 4Q19 (3Q19: revised down to 6.0% y/y from 6.2% y/y), a tad lower than our estimate (6.5% y/y) but matching Bloomberg consensus (6.4% y/y). It was largely thanks to the continued acceleration in government spending for infrastructure projects, decent private construction activities, and sustained household consumption amid benign inflation, accommodative monetary policy and overseas remittance inflows in 4Q19.”

“The 2019 full-year GDP growth came in at 5.9%, lower than our projection of 6.0% and missing the government’s revised target of 6.0%-6.5%. However, we expect the economy to hold up its expansion above 6.0% throughout 2020 amid residing global downside risks. Domestic drivers such as infrastructure projects, overseas remittance inflows, and accommodative monetary policy will continue to underpin the growth outlook. We maintain our 2020 full-year growth target at 6.5% (Official target: 6.5%-7.5%).”

“Having said that, we think a further improvement in the economy and a gradual rise in inflation will unlikely derail BSP’s plan to further unwind its past aggressive monetary policy tightening this year. Strong PHP against the USD and lingering external downside risks support further rate cuts by BSP over next few months. We reiterate our call for a 25bps rate cut to 3.75% at the 6 Feb MPC meeting before the window of opportunity narrows further.”