MANILA (Reuters) – The Philippine economy grew less than expected in the second quarter as government spending remained tepid, bolstering chances the central bank will cut interest rates at its meeting later on Thursday to support the economy.
Gross domestic product grew 5.5% in the April-June period from a year earlier, the statistics agency said on Thursday, missing the median forecast for 5.9% growth tipped in a Reuters survey of 10 economists.
“This means that we will have to grow by an average of at least 6.4% in the second half of the year to reach the low end of the full-year growth target of 6-7% in 2019,” Economic Planning Secretary Ernesto Pernia told a news conference.
Pernia attributed the continuing weak performance of the domestic economy to the delayed passage of the 2019 national budget and the slowdown in government spending.
The Philippines remains one of the fastest growing economies in Asia, but rising downside risks, including simmering U.S.-Sino trade tensions, put this year’s growth target at risk and would likely justify further policy easing, economists say.
Bangko Sentral ng Pilipinas, meeting later in the day, is expected to cut its key policy rate by 25 basis points as global economic risks rise.
The central bank raised rates by a total of 175 basis points last year to rein in inflation, which peaked at a near-decade high of 6.7% in September and October, but prices pressure have since eased.
Annual inflation eased to a two-year low of 2.4% in July, bringing year-to-date average inflation to 3.3%, comfortably within the central bank’s 2%-4% percent target this year.
Reporting by Neil Jerome Morales and Enrico Dela Cruz; Editing by Jacqueline Wong
Our Standards:The Thomson Reuters Trust Principles.