MANILA - Philippine economic growth next year will likely disappoint because of limited fiscal support, and this will lead the Bangko Sentral ng Pilipinas to cut rates, global financial services firm Nomura said on Tuesday.

Nomura said the BSP will likely cut its policy rate by another 50 basis points in the first quarter to support the Philippine economy.

The BSP has already reduced interest rates by a cumulative 200 basis points this year, and cut the reserve requirement ratio for banks by 200 basis points to 12 percent.

The BSP made an unexpected 25 basis points policy rate cut during its last rate-setting meeting in November, its fifth rate cut of the year, as it saw the need for further easing to shore up the economy after the worse-than-expected GDP contraction in the third quarter.

Nomura said central banks in Asia are likely to hesitate in unwinding their easy policies because of vaccine uncertainty in first half, negative output gaps, below-target inflation, currency appreciation and unchanged US Federal Reserve policy rates.

"We expect further easing in parts of ASEAN by Q1 2021, and unchanged rates elsewhere. With more vaccine certainty in H2, a gradual shift in tone is likely from some central banks, but through a normalization of excess liquidity and macroprudential tools to begin with," Nomura said.

Philippine business leaders have earlier said that the amount that the government was planning to spend for 2021 was not enough to stimulate the economy.

Government economic managers however refused to consider hiking the planned fiscal stimulus package saying the government had no more funds to spend, and they didn't want to risk the country's credit rating by borrowing more.

The World Bank further lowered its outlook for the Philippines this year citing the lingering effects of the pandemic as well as the impact of recent storms.

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