MANILA: With merchandise exports its only concern, the Philippine economy is likely to continue its “robust” growth as the country remains isolated from global headwinds at least for this year, First Metro Investment Corporation (FMIC) and the University of Asia and the Pacific (UA&P) have said in their latest joint assessment.
“The Philippine economy continues to be sufficiently robust as to decouple, at least for this year, from the weakness of the global economy, with exports as the only negative factor,” Business World quoted FMIC and UA&P in their July issue of The Market Call.
For this year, FMIC and UA&P forecast a “robust” 6-6.5 percent growth for the Philippine economy, even allowing for a 5 percent contraction in agriculture. The economy is seen slowing down this quarter but picking up in the final three months, the report said.
“The only negative factor has been exports. And despite it, the economy has expanded strongly in the past three quarters. We think export performance should improve slightly and move into the low positive growth territory in H2. Thus, it would have a more neutral or slightly positive effect for growth in H2,” FMIC and UA&P reportedly noted.
Gross domestic product (GDP) grew 5.9 percent last year on the back of household demand and private investments, but it missed an official 7-8 percent target for 2015. This year, the country is projected to expand by 6-7 percent, a trimmed target that was announced by economic managers in February amid global headwinds such as China’s slowing expansion and the impact from a slump in global oil prices, said the news portal.
GDP is also reportedly expected to grow 6.5-7.5 percent in 2017 and 7-8 percent annually in 2018 up to 2022, according to the government’s updated targets.
The latest report noted that capital goods imports skyrocketed by 56.7 percent in April, marking the 14th out of the last 15 months of double-digit boost and signalling growing investments ahead.
“Heavy infrastructure spending in April as National Government expenditures, excluding interest payments, bumped up by 26 percent, provided the second leg for the investment — or capital formation — run. This second engine adds to the first engine — consumer spending — which has provided consistently solid impetus to the economy,” the report highlighted.
“Investment spending has been accelerating at high double-digit pace in the last six quarters. Besides, early indicators such as manufacturing output and Meralco (Manila Electric Co.) electricity sales also point to strong economic growth continuing in Q2.”
While merchandise exports have continued to fall, albeit by a relatively slower 4.1 percent in April, FMIC and UA&P said overseas Filipino worker (OFW) remittances in peso terms offset this as they swelled by 8.2 percent, reported Business World.
“The latter augurs well for solid consumer spending which leaned also on election-related spending while the BSP Consumer Confidence reading for Q2 as basically unchanged from Q1,” the joint assessment reportedly said, adding that “Brexit will likely have no impact in Q2 figures.”
For the second quarter, FMIC and UA&P had earlier said they expect that the economy “to rise at slightly above 7 percent in Q2, and retain its robust run for the rest of 2016 despite the global slowdown” underpinned by strong domestic demand.
