MANILA - ANZ bank said Monday it lowered its growth forecast for the Philippines, citing weakening private consumption and the potential fallout from fighting in the south.
Gross domestic product will likely grow 6.5 percent this year, lower than its original projection of 6.9 percent, ANZ said. It kept its forecast for next year at 6.2 percent.
"Although growth remains strong by regional standards, the marginal momentum is softening," the bank said in its report on the Philippines titled "is the investment cycle turning."
Nomura last week maintained its 2017 growth forecast at 6.7 percent, citing the government's infrastructure spending. Credit Suisse cut its projection to 6 percent, citing a weak labor market.
"Of particular note is private consumption, which has been decelerating for four consecutive quarters and now appears to be settling at trend levels," ANZ said in a research note.
"Further downside risks could emerge from the on-going armed conflict in Marawi City," it added.
Some 500 people have been killed in 50 days of fighting between government forces and Islamic State-inspired militants in Marawi. The violence prompted President Rodrigo Duterte to place the entire Mindanao under martial law.
After inflation peaked in March, ANZ said it expected the Bangko Sentral ng Pilipinas to raise interest rates by 25 basis points in the fourth quarter and by 50 basis points in 2018.
"We recognize that accelerating credit growth remains a risk. It is however, likely that the BSP may address it via tighter macro prudential standards," it said.