The International Monetary Fund (IMF) [link] cut its full-year 2024 GDP growth forecast for the Philippines to 5.8%, down 20 basis points from its previous forecast of 6.0%. The IMF also cut its FY25 GDP growth projection to 6.1%, down 10 basis points from the previous 6.2%. Both revisions are due to the lower-than-expected private consumption in the first half of 2024, which the IMF attributes “in part” to the high price of basic foods. The IMF said it thinks “private consumption is going to grow slightly with less momentum”, but that they think the “non-monetary efforts to reduce food prices and especially rice prices… will be supportive of consumption growth going forward.”
MB bottom-line: The government’s FY24 GDP growth target is 6.0% to 7.0%, so it’s significant to see the IMF’s figures projecting us to fall below the lower bound of the government’s range. Perhaps this kind of feedback from the international finance community is behind the BSP’s rapidly shifting public stance toward additional FY24 rate cuts and that surprise “jumbo” RRR cut that pushed P300 billion into the economy to help fund development. Perhaps the recent noise about pushing the RRR to zero is all a PR effort to market the region’s growth potential by influencing the assumptions of the organizations that make these types of projections like the IMF. I really hope that lower interest rates and the lower RRR don’t contribute to food price inflation in any way. I’m thankful that India has lifted its white rice export ban. I don’t know if I could stomach seeing food prices tick upward just to let the government try to snipe its FY24 GDP forecast by dumping billions into the market at the last minute.
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