Asia Economics & Strategy Daily PH Q2 GDP & BSP Cut in August； CN Deflationary Concerns

Investment Rating - The report indicates a positive outlook for the Philippines with a slight increase in the GDP growth forecast from 5.9% to 6.0% for 2024, suggesting a favorable investment environment [10]. Core Insights - The Philippines' Q2 GDP growth was reported at 6.3% YoY, which is an improvement from Q1's 5.8% YoY, although the growth was attributed to a low base effect. Sequentially, the GDP expanded by 0.5% QoQ SA, marking the slowest pace in four quarters due to subdued household consumption [10]. - In China, despite CPI and PPI readings beating expectations in July, concerns about deflation persist. The CPI increase was primarily driven by supply-side factors for food and seasonal travel demand, while core inflation showed a slight decline [11]. - The report anticipates a 25bps rate cut by the Bangko Sentral ng Pilipinas (BSP) starting from the August 15 policy meeting, despite a temporary spike in inflation in July [10]. Summary by Sections Philippines - Q2 GDP growth of 6.3% YoY was stronger than previous forecasts, but the sequential growth of 0.5% QoQ SA was the slowest in four quarters. The BSP expects a negative output gap to persist, and inflation is projected to decline from August onwards [10]. China - CPI and PPI readings in July exceeded expectations, but the report suggests that this may not alleviate deflationary concerns. Policy efforts are deemed essential for sustainable reflation, with recent measures being insufficient [11]. India - The report notes that July CPI is expected to be around 3.8% YoY, influenced by base effects, with core inflation projected at 3.4% YoY. Industrial production is anticipated to decline sequentially due to lower manufacturing activity [7][10].