MANILA -- Economic growth will likely recover in the first quarter, with the Bangko Sentral ng Pilipinas poised to loosen policy as inflation cools further, an analyst said Monday.
Central bank Governor Benjamin Diokno told Bloomberg in an interview published on Sunday that it was only a "matter of time" before the BSP cuts interest rates, keeping a close watch on oil prices.
Gross domestic product could grow by 6.5 percent in the first quarter and 6.8 percent for the full year 2019, driven by infrastructure spending, private investments and a recovery in private consumption, said Nomura Southeast Asia economist Euben Paracuelles.
The economy grew 6.3 percent in the fourth quarter of 2018, with full year growth at 6.2 percent. Official data for the first quarter is due out May 9, the same day the Monetary Board meets on interest rates.
The inflation outlook for 2019 is looking “fairly good,” with the headline rate likely to settle at the mid-point of the government’s 2 to 4 percent target range. The risk from oil is “modest,” Paracuelles told ANC's Market Edge.
"I think even though we got exports coming off a little bit because of the global slowdown, I think the Philippines is one of those economies that can generate growth internally and provide the offset," Paracuelles said.
"So there’s infrastructure spending, private investment is strong, consumption is going to recover this year as well because inflation is coming back down," he said.
An average 3 percent inflation is a “good justification” for the BSP to cut the reserve requirement ratio or RRR for banks.
Rice prices are expected to ease further by the second half of the year as the government implements a new law that taxes imported rice in place of import quotas.