Likely Turning Point for Inflation Risk and Policy Rate Outlook

2017 Budget Deficit of 2.2% of GDP Vs 3% Target: Missing a Strong Fiscal Stimulus

Heightened Inflation Fears Spook 1Q Consumer Sentiment

Philippines Macroeconomist/Strategist

Jun Trinidad

Macroeconomics

<p><strong>Executive Summary:</strong> Despite higher rate pressures, the 1Q18 interest bill did not 'crowd-out' primary expenditures (+30.4%YoY) and enabled the strong fiscal stimulus to prevail.  TRAIN's revenue lift supported upbeat primary expenditures. Expenditures outpaced revenues but the 1Q budget deficit still fell short of the 1Q deficit target. BSP (Bangko Sentral ng Pilipinas) on hold and 1Q borrowings sourced largely offshore eased pressure on the government's debt cost.  All these bode well for local…</p>

Executive Summary: Despite higher rate pressures, the 1Q18 interest bill did not 'crowd-out' primary expenditures (+30.4%YoY) and enabled the strong fiscal stimulus to prevail.  TRAIN's revenue lift supported upbeat primary expenditures. Expenditures outpaced revenues but the 1Q budget deficit still fell short of the 1Q deficit target. BSP (Bangko Sentral ng Pilipinas) on hold and 1Q borrowings sourced largely offshore eased pressure on the government's debt cost.  All these bode well for local…

Philippines Stock Exchange PSEi Index (PCOMP INDEX)

Resumption of Strong Fiscal Stimulus in 1Q18