• It is expected that Philippines will continue as one of Asia’s fastest growing economies, even though, the expected economic growth was by 6.8% (see chart 1).

• Factors hindering the economic growth:
• Higher inflation due to higher global oil prices
• Normalisation of monetary policy in the United States which will raise their interest rate
• US-China trade war

• Inflation for the month of June is expected to be at 4.7% (see chart 2), which is marginally higher than the 4.6% of May and is the highest it’s been in five years.

• Inflation pressures are most probably going to continue because of the second-round effects. It should also be noted that month-on-month inflation show signs of a slower momentum (see chart 3).

• The rise of the interest rate from the US Federal Reserves has placed a strain on the Philippine market. The BSP has already raised their rate twice (50 bps) this year with another one expected to occur during the third quarter as to combat market volatilities. Another hike by the end of the year is possible depending on market stability (see chart 4).
  
  

• According to the Department of Budget and Management (DBM), the government spending on infrastructure grew as much as 26% year-on-year. Spending on infrastructure development was PhP58.1 billion last May which went up from the PhP46.2 billion a year ago. The first five months of infrastructure spending reached PhP280.8 billion, which was 42.4% higher than the PhP197.2 billion in the same comparable period. This development stems from the notion that by developing our infrastructure, this will support economic growth (see chart 5).

• According to the Department of Finance (DoF), the current account (CA) remains healthy with the current account deficit declining in Q1 to US$208 million compared to last year where it was US$860 million (see chart 6).
  
  

• Despite the volatile external environment, the macroeconomic fundamentals are still strong and healthy. Political noise has not derailed the economic growth prospects at this time which can be proven by 2017’s economic expansion.
  
  

Outlook by Ruben Carlo O. Asuncion, UnionBank's Chief Economist 

Note: Any opinion or statement in the Philippine Outlook does not constitute the opinion of UBP. Your use of this document and any of its contents is at your own risk and UBP does not accept any liability for the results of any action or decision taken on the basis of or reliance on the Philippine Outlook or any of its content