The Philippine economy is expected to accelerate to 6.3% year-on-year in the second quarter from 5.7% in the March quarter, Moody's Analytics said in its Weekly Highlights and Review.
"Two countries will post June-quarter GDP during the week. In the Philippines, we expect economic growth to accelerate to 6.3% year-on-year from 5.7% in the March quarter. The result will be flattered by a low base effect. A year earlier, growth slowed substantially to 4.3%, and in quarter-on-quarter terms, GDP (gross domestic product) went backward," the report said.
According to Moody's Analytics, the strong economic growth is driven by robust goods exports and government spending. However, the report said that private consumption and investment growth will stay muted as high borrowing costs weigh on budgets.
Moody's Analytics added that a slower increase in tourist arrivals could see service exports lose some of their shine.
The financial intelligence provider said that Indonesia is also forecasted to post positive economic growth in the same period, albeit at a slower pace than the Philippines.
It added, "In Indonesia, we expect GDP growth to slow to 5.05% year on year from 5.12% in the March quarter. Domestic demand should hold up, but weak external demand will limit export growth."
Moody's Analytics said the uneven recovery in China is dragging Indonesia's economy, which should pose a particular concern. Beijing is Jakarta's largest export partner.
"We expect Indonesia's economy to expand 5.2% in 2024. China will post July inflation data. We expect producer prices to fall 0.4% year on year, which will be the smallest retreat this year. Nonferrous and oil prices will likely rise, while prices for coal and ferrous metals will fall," it said.
The report explained that downstream price wars in household consumables and durables could peter out in Indonesia as Chinese authorities tackle what they consider to be 'vicious competition' among domestic firms.
Moody's Analytics added, "But upwards price adjustments will take time, leaving us to expect consumer price inflation to stick to its tepid nearzero growth trend."
The prediction of Moody's Analytics on the country's economic growth is bigger than the forecast by a Filipino economist who said last week that the domestic economy would grow by 6% in the second quarter.
Rizal Commercial Banking Corporation chief economist Michael Ricafort commented, "Faster consumer spending, which accounts for at least 70% of the economy, as many businesses and industries recover further with no more Covid restrictions for more than a year already or since June 22, 2023, especially those struck by the pandemic, going back or even exceeding [their] pre-pandemic levels."
He added that higher government spending also added to the growth.
According to Ricafort, the faster government spending was led by the continued growth in infrastructure spending and preparations for the May 2025 midterm elections, as government agencies ramped up the implementation of projects or programs before the election ban.
Official second-quarter Philippine economic growth data will be released by the Philippine Statistics Authority next week.
In the first quarter of the year, the Philippine economy grew by 5.7%.
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