Fitch’s BMI downgrades PH economic outlook for 2024

Fitch Group unit BMI on Monday downgraded its Philippine economic growth outlook for the year, following the release of the second-quarter performance which fell below its earlier projection.

In a commentary, BMI said it now expects the Philippine economy to grow by 6.0%, lower than its initial projection of 6.2%, and within the government’s downward revised target range of 6.0% to 7.0%.

This comes as the economy grew by 6.3% in the second quarter, the strongest performance in five quarters, but below BMI’s 6.5% projection.

“The latest growth outturn clearly showed that we have overestimated the health of the Philippine economy. To reach our previous 6.2% growth projection for 2024, the economy must expand by around 6.4% in H2, which we think is unlikely,” BMI said.

According to BMI, the 6.3% growth in the second quarter painted a “misleading” picture of the economy, as this came from a low base of 4.3% in the second quarter of 2023.

Citing the seasonally adjusted 0.5% quarter-on-quarter expansion, BMI noted that this was the softest pace since the second quarter of 2023, on the back of the poor performance in the external sector.

“Against the backdrop of a slowing global economic in H2, external demand will prove even less supportive over the coming quarters,” BMI said.

Latest data available from the Philippine Statistics Authority (PSA) showed that the balance of trade in goods (BoT-G) posted a $4.303-billion deficit in June, lower than the $4.707-billion deficit in May but wider than the $3.936 billion in June 2023.

A deficit indicates that the value of a country's imports exceeded export receipts, while a surplus indicates more export shipments than imports.

Exports for the month stood at $5.566 billion, lower than the $6.330 billion in May and $6.730 billion the same month last year. — BM, GMA Integrated News