Private economists slash inflation forecast

By Lawrence Agcaoili (The Philippine Star) Updated February 06, 2012 12:00 AM

MANILA, Philippines - Private economists further slashed their inflation forecast for the Philippines this year and next on the back of fragile global economic growth due to weaker than expected expansion in advanced economies led by the US and Europe, a survey conducted by the Bangko Sentral ng Pilipinas (BSP) showed.

Based on the BSP’s Private Sector Economists’ Inflation Forecast for the fourth quarter, inflation would average 4.2 percent instead of 4.3 percent this year and 4.1 percent instead of 4.5 percent next year as weak global economic growth would temper inflationary pressures brought about by damages caused by weather disturbances late last year.

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Based on the probability distribution on the forecasts provided by eight out of 11 respondents, there is a 50.7 percent chance that average inflation for 2012 could settle within 4.1 percent to five percent. The BSP has set an inflation target of three percent to five percent between 2011 and 2013.

“Analysts noted that the early part of 2012 could lead to increased inflation pressures due to agricultural constraints as a result of the damage wrought by Typhoon Sendong. Nonetheless, the continuing weak global economic growth could help temper domestic inflationary pressures,” the BSP said.

For 2012, Bank of China and Nomura expect inflation hitting 5.2 percent, followed by Bank of Commerce at 4.8 percent, Banco de Oro at 4.5 percent, Asia ING at 4.4 percent, ATR Kim Eng at 4.3 percent, Metrobank at 4.2 percent, and MIB at four percent.

Rizal Commercial Banking Corp. sees inflation this year averaging between 3.5 percent and 4.1 percent followed by Deutsche Bank at 3.8 percent, Goldman Sachs at 3.7 percent, and think tank IDEA at 3.32 percent.

For next year, the survey showed that ATR Kim Eng and Bank of China see inflation averaging 4.8 percent followed by BDO with 4.7 percent, Asia ING with 4.3 percent, and Metrobank with 4.1 percent. Goldman Sachs and Deutsche Bank expect inflation to hit four percent next year followed by MIB with 3.5 percent, IDEA with 3.1 percent, and RCBC from three percent to four percent.

Latest data from the National Statistics Office (NSO) showed that inflation inched up to 4.4 percent last year from 3.8 percent in 2010, falling within the BSP target of three percent to five percent.

The BSP’s latest inflation report showed that the baseline inflation forecasts reflect a decelerating path, with average headline inflation rates for 2012 and 2013 projected to settle within the three percent to five percent inflation target.