Philippine economic growth to slow to 5.7% in 2019

The move comes after the economy grew by 5.5% in Q2.

The Philippine economy is tipped to grow by 5.7% in 2019 and 6.1% in 2020 which marks a downward revision from the original 5.9% and 6.3% respectively, according to Fitch Solutions.

The revised estimate took into account the economic slowdown in Q2 where GDP growth eased to 5.5% from 5.6% in Q1 2019.

The Q2 growth fell down below the government's 6.0-7.0% target and the 5.9% rate expected by Bloomberg consensus, according to Fitch Solutions.

Also read: Philippine economic growth contracted to 5.5% in Q2

The slowdown was attributed to weaker external demand, tighter monetary conditions, and a delayed approval of the 2019 fiscal budget as budget deficit narrowed 26.9% in H1 2019.

Government expenditure is expected to pick-up to boost domestic growth, but business investment and employment growth might cool due to weaker external demand.

Business expectations for future activity declined to 52.0 in Q2 from 47.6 in Q1, as Sino-American trade tensions and uncertainty on global growth weigh on external demands.

Meanwhile, current account deficit narrowed due to import growth of -10.4% YoY in June vs. export growth of 1.5%.

Credit growth is expected to be less supportive through 2019, as the impact of the easing of monetary policy will unlikely be felt by the domestic economy until 2020.