Philippines: war and corruption campaign weigh on growth

The Philippines slowed further in the second quarter of the year as the impact of the ongoing anti-corruption campaign and higher inflation brought about by the crisis in the Middle East weighed heavily on demand. The weakness of the economy is likely to influence the thinking of the central bank as it weighs its next move. But with inflation still well above target, we are sticking with our view that the BSP will hike rates by a final 25bps at its next meeting later this month.