By Luisa Maria Jacinta C. Jocson, Reporter
THE INTERNATIONAL Financial Fund (IMF) mentioned that upside dangers to the outlook for Philippine headline inflation nonetheless persist.
“Dangers to the inflation outlook have receded considerably however stay tilted to the upside,” a consultant of the IMF informed BusinessWorld in an e-mail.
“Meals costs stay weak to adversarial provide shocks, and rising geopolitical tensions and recurrent commodity worth volatility additionally pose upside dangers,” it added.
Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. earlier mentioned that the steadiness of dangers to the inflation outlook for subsequent 12 months till 2026 has shifted to the upside.
That is primarily because of expectations of upper electrical energy charges and minimal wages, he mentioned.
Regional wage boards earlier this month accredited a hike within the each day minimal wages of staff in Cagayan Valley, Central Luzon and Soccsksargen.
In July, the Regional Tripartite Wages and Productiveness Board additionally accredited a P35 minimal each day wage hike for staff within the Nationwide Capital Area.
In the meantime, the IMF sees inflation settling at 3.3% this 12 months and three% in 2025.
The BSP expects inflation to common 3.1% this 12 months and speed up to three.2% subsequent 12 months and three.4% in 2026.
The IMF mentioned that “decisive financial tightening and non-monetary measures” have helped tame meals inflation within the Philippines.
“Decrease commodity costs have helped usher inflation right down to inside the BSP’s goal band,” it mentioned.
Headline inflation eased to 1.9% in September from 3.3% in August. The September print was additionally the slowest in over 4 years or because the 1.6% print in Could 2020.
Meals inflation slowed to 1.4% from 4.2% a month in the past. This as rice inflation sharply slowed to 5.7% in September from 14.7% in August and 17.9% final 12 months.
“The BSP decreased its coverage price by 25 foundation factors (bps) in each its August and October conferences this 12 months, according to inflation and inflation expectations returning in the direction of the goal,” the IMF mentioned.
Because it started its easing cycle in August, the Financial Board has decreased coverage charges by 50 bps, bringing the important thing price to six%.
Mr. Remolona earlier mentioned the central financial institution might ship one other 25-bp price lower on the final policy-setting evaluation on Dec. 19.
CURRENT ACCOUNT
In the meantime, the IMF sees the nation’s present account deficit additional easing within the close to time period.
“The narrowing of the present account deficit in 2024 and 2025 can be supported by decrease commodity costs, a gradual pickup in exports, supported by tourism returning in the direction of pre‑pandemic ranges and demand for the enterprise course of outsourcing sector holding up,” the IMF mentioned.
The IMF expects the Philippines’ present account deficit to settle at 2.2% of gross home product (GDP) this 12 months and ease additional to 1.8% in 2025 and 1.1% by 2029.
“Inward remittances are additionally anticipated to rise barely,” it added.
Within the January-August interval, money remittances expanded by 2.9% to $22.22 billion from $21.58 billion a 12 months earlier. The BSP expects money remittances to develop by 3% this 12 months.
“Over the medium time period, the present account is predicted to be supported by a continued gradual rise in exports,” the IMF mentioned.
“From a saving‑funding perspective, the present account enchancment is predicted to be pushed by an increase in non-public and public financial savings, with the latter underpinned by the federal government’s plans to implement a gradual medium-term fiscal consolidation,” it added.
Within the first half of the 12 months, the nation’s present account deficit stood at $7.1 billion, accounting for 3.2% of GDP.
The BSP expects the present account deficit to achieve $6.8 billion this 12 months or 1.5% of GDP.
