THE ASEAN+3 Macroeconomic Research Office (AMRO) maintained its growth forecast for the Philippine economy at 6.4% this year but revised its inflation rate projection upwards.

In its ASEAN+3 Regional Economic Outlook 2020 published Jan. 17, a copy of which was obtained by BusinessWorld, AMRO said the economy will likely grow by 6.4% this year, maintaining the forecast it gave in October last year after its annual consultation visit.

For inflation, AMRO said it now sees the indicator averaging 3% this year, compared to the 2.9% forecast it issued in December.

The inflation forecast is within the government’s 2-4% target range for the year.

AMRO’s gross domestic product (GDP) growth forecast of 6.4%, if realized, will fall short of the 6.5-7.5% official target range set for this year, but will exceed the 2018 level of 6.2%.

AMRO did not discuss the reasons behind the projections.

AMRO now expects the ASEAN+3 region to post 4.9% GDP growth this year, against the previous 4.7% forecast issued in December. In 2018, actual growth was 5.3%.

ASEAN+3 is composed of the 10 ASEAN member nations — Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam — plus and China, Japan and South Korea.

“With the recent progress in the US-China trade talks and the signing of the Phase One deal, we expect the region… to grow by 4.9% in 2020, amid resilient domestic demand and improving manufacturing activity indicators. This is an upward revision to our projection in December 2019,” AMRO’s chief economist Hoe Ee Khor said in a blog post yesterday.

In a separate projection also released Wednesday, Insular Life Assurance Co., Ltd. (InLife) said it expects the economy to grow by 6.3% this year on the back of robust consumption and public spending, specifically on infrastructure projects.

“We expect GDP to grow 6.3% this year. Where will it come? From robust consumption, which is the first pillar of growth. And the second is a come back for government expenditure,” ATR Asset Management, Inc.’s global multi-asset portfolio manager Ivan Ante said during Insular Life’s 2020 economic outlook forum on Wednesday.

Mr. Ante said the Bangko Sentral ng Pilipinas still has room for more easing given benign inflation which ATR projects to average 2.8% for the year.

He said the Bangko Sentral ng Pilipinas (BSP) will likely reduce benchmark interest rates by another 50 basis points (bps) this year, based on the recent comment by Governor Benjamin E. Diokno.

Last year, the central bank reduced policy rates by a total of 75 bps, partially reversing 175 bps worth of rate increases imposed in 2018 in response to surging inflation.

For the reserve requirement ratio (RRR), Mr. Ante said ATR also expects the BSP to cut the reserve requirement ratio (RRR) by another two percent.

“For policy rates, we think they are going to cut again two times or 50 bps this year. The RRR, we think they will cut by 2 percent… So that’s additional liquidity in the system (that is) important for growth,” he added.

Mr. Ante said the Philippine Stock Exchange index will likely settle within a range of 8,600-8,800 this year.

He said the peso will likely depreciate against the dollar this year to a range of P51.5-52 per dollar.

Last year, the economy grew by 5.6%, 5.5% and the downward-revised 6% in the first three quarters. The 2019 budget delay was largely blamed for slower-than-expected GDP growth in the first half. — Beatrice M. Laforga

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