Philippines 2015 GDP forecast cut by 100bp

Philippine's Q2 GDP growth came in marginally below expectations at 5.6% y/y. Q1 GDP growth was 5.0% y/y, revised lower from the preliminary print of 5.2% y/y. On a seasonally adjusted basis, GDP expanded 1.8% q/q. Due to the lower than expected growth momentum in H1 2015 (5.3%), the country's expected growth rate is revised  to 5.5%,in 2015 from 6.5% earlier, but for 2016 retain forecast at 6.0%, estimates Barclays. 

Despite the cut in the growth forecast, the Philippines is expected to continue to outperform the other Asean economies, with the country set to be the fastest growing economy among the major Asean economies for a third consecutive year in 2015. Post the GDP release, Economic Planning secretary Baliscan said that growth within the 6.0-6.5% range looks more realistic for 2015, notes Barclays. The risks from weather conditions remain, but so far inflation has remained manageable. 

"While the BSP continues to sound cautious on rising market volatility,  the bank is unlikely to deliver any policy easing, as domestic activity remains resilient, despite poor external conditions. We recently pushed back our rate hike forecast to Q3 2016, which would be after the presidential election in May 2016", states Barclays.