The Philippine central bank raised its benchmark rate to tame inflation, saying the economy is ``strong enough'' to withstand a third increase in borrowing costs since June. Bangko Sentral ng Pilipinas increased the rate it pays banks for overnight deposits by 0.25 percentage point to 6 percent, Governor Amando Tetangco told reporters in Manila today.
Q2 2008 GDP
Philippine economic growth eased to a three-year low of 4.6 percent in the second quarter as consumer spending waned, the government said today. Inflation may have accelerated to as much as 12.6 percent in August from 12.2 percent in July, and may exceed the central bank's targets for 2008 and next year, Governor Tetangco said today. Bangko Sentral last month raised its 2008 inflation forecast to a range of 9 percent to 11 percent, from 7 percent to 9 percent. The government this month lowered its 2008 growth target for a second time this year to between 5.5 percent and 6.4 percent, which would be a slowdown from the 7.2 percent expansion in 2007.
Remittances from the more than 8 million Filipinos abroad, or about a tenth of the population, have continued to support the $118 billion economy this year as faster inflation eroded domestic consumer spending. Consumer spending growth slowed to 3.4 percent in the second quarter from 5.2 percent in the previous three months. Government spending, which accounts for a tenth of the economy, fell 5.1 percent.
Exports, which make up two-fifths of the economy, added 7.7 percent from a year earlier, after a 6.1 percent drop in the first quarter. Services climbed 4.3 percent, slower than the 6.5 percent pace in the previous three months.
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