The British Chamber of Commerce Philippines (BCCP) identifies the upcoming decision of Bangko Sentral ng Pilipinas (BSP) on interest rate cut a ‘tough call’ at its upcoming policy meeting on Aug. 15, 2024, citing the recent numbers on GDP growth and uptick on headline inflation.
BCCP Executive Director/Trustee Chris Nelson said in an interview that, “Let me just say, first of all, that the Bank of England is one of the first to cut. They cut on the 1st of August from 5.25 to 5. Let’s look at some of the key points. I should point out that the Philippines’ GDP, I think, for the second quarter is 6.3%, which has risen upward. Of course, the central bank is concerned about inflation, which, if I recall correctly, has now moved up to about 4.4 on a monthly basis.”
Nelson also cited recent efforts from the Philippine government in easing inflation such as the Executive Order No. 62 which mandates the modification of import duty rates on various products including pork and other agricultural commodities, maintaining the lowered tariff rates until 2028 to help augment the country’s supply, manage inflationary pressures, and safeguard the purchasing power of Filipinos.
“In terms of optimism, what we would like to see, of course, executives and companies want to be in an environment where interest rates are, in terms of outlook, going downward, because growth is a key factor,” Nelson said.
The British Chamber has consistently advocated in reducing the food inflation rate, which also posed an increase up to 6.7% in July 2024 with meat and other parts of slaughtered land animals as one of the main drivers of the uptick. Recently, the British Chamber in partnership with the Agriculture and Horticulture Development Board (AHDB) hosted the Philippine-British Meat Trade Briefing & Reception as part of the advocacy to fight inflation and reinforce the growing market for British pork in the Philippines, making it the UK’s 2nd largest pork export market in Asia next to China.
Additionally, AHDB participated in the World Food Expo on 31 July-03 August to continue the collaborative work with the government and its Philippine counterparts. The British Chamber also expressed support for the recent ratification of the Anti-Agricultural Economic Sabotage Act and its passage into law as early as possible.
Meanwhile, BSP Governor Eli M. Remolona Jr. previously said that an interest rate cut is “a little bit less likely” due to “slightly worse than expected” inflation rate reaching an uptick of 4.4% in July 2024 from 3.7% in the previous month. Meanwhile, the Philippine Gross Domestic Product (GDP) accelerated to 6.3% in the second quarter of 2024, still making the country one of the fastest-growing economies in the region.
Nelson further cited the country’s economic performance and foreign investors outlook, saying that, “the Philippines is growing. If you take the UK as a comparison, our growth rate for the previous quarter is 0.7%. That’s just barely growing. Therefore, there’s room and need to keep growing the economy. In terms of the environment, we will have to see what the BSP does, but I think going forward, what companies and people are looking for is a lower interest rate environment to generate more growth.”
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