According to DBS Bank Ltd. Of Singapore, Philippines’ economic growth would slow down while inflation will continue to rise further through 2019 if oil prices reach $100 per barrel when the US increases sanctions on Iran, as stated in their Insights and Analysis strategy.
This in turn would cause the PH Peso to depreciate to 60 per $1 in contrast to the forecasted 56.5 per $1 for next year, given that the $100 per barrel would push through.
Due to this, it is possible for Philippines GDP to lose a flat three percent as opposed to the 1.4 percent decrease they were expecting because importers will have to pay more for oil shipments.
The weakness of the PH Peso would further widen trade deficit leading to a stunted growth in Philippines’ economy.
Inflation would average on a 5.9 instead of 5.5 percent next year, wherein the $100 per barrel scenario it would increase by 0.4 percent, or even higher. This year it has leaped from 6.4 percent in August to 6.7 percent in September alone, due to the recent increase in oil and food prices, the weak PH Peso, and the Tax Reform for Acceleration and Inclusion (TRAIN) act.
The Bangko Sentral Ng Pilipinas (Central Bank of the Philippines) also released a statement regarding the unfortunate Month-on-Month slow down. And based on its latest assessment, it expects inflation to average at 5.2 percent at the end of this year.
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