Ompong may stoke inflation but economic growth 'solid,' says S&P


Posted at Sep 17 2018 10:45 AM

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MANILA -- Damage to agriculture due to Typhoon Ompong (Mangkhut) provides "impulse" to inflation but Philippine growth is still expected to be "very solid," an analyst said Monday.

Ompong, the strongest storm so far this year, tore through rice and vegetable growing regions in Luzon over the weekend, triggering floods and landslides.

Consumer prices rose 6.4 percent in August, as damage from monsoon rains drove up prices. The government had hoped inflation would taper off in September.

A 25-basis point hike in the benchmark borrowing rate by the Bangko Sentral ng Pilipinas next week is a "higher probability" compared to a 50-basis point increase, which is still "on the table," said S&P Global Ratings economist Vincent Conti.

"This typhoon is going to generate an additional impulse to prices moving forward," Conti told ANC's Market Edge.

The economy is still poised to grow by 6.5 percent in the next 2 years due to strong consumption and investments.

"At the end of the day the domestic story of the Philippines in terms of the growth rate is very solid. Those are both contributing to strong growth in consumption which is generating a lot of investment as well," Conti said.