FMIC, UA&P estimate 2016 economic growth on target

ECONOMIC GROWTH likely clocked seven percent for the entire 2016, a pace that should be doable this year as well on the back of a bigger stream of investments and as Filipinos spend more, analysts of First Metro Investment Corp. (FMIC) and the University of Asia & the Pacific (UA&P) said in a joint report they released yesterday.

“The Philippine economy is on the verge of sustained fast and inclusive growth. The economic expansion’s pace tracks seven percent in 2016 and 2017,” read the January edition of The Market Call Capital Markets Research sent Monday.

The analysts expect gross domestic product (GDP) to have grown by seven percent in the fourth quarter alone, which would be a tad slower than the 7.1% clocked in July- September but would pick up from the 6.5% in 2015’s final three months.

If realized, the estimated 2016 growth average would match the top end of the government’s 6-7% full-year target and would be the fastest in three years.

A BusinessWorld poll among 13 economists last week yielded a median 6.9% estimate for the full year.

The Philippine Statistics Authority will report official GDP data on Thursday.

FMIC expects the robust growth story to continue this year on the back of a sustained rise in investments, continued strong demand and a slight improvement in exports.

“We see the seven percent GDP growth in Q4 and for full year 2016 spill over into 2017, with strong domestic demand boosted slightly by an improvement in external demand,” The Market Call read,

pointing out that an expected pickup in global growth should support recovery in merchandise exports.

“Exports should register more positive gains in 2017 and thus contribute a little to economic growth. OFW remittances ( in USD) growth should remain subdued at the 2-4% range, but peso-wise, the peso’s expected depreciation should help these remittances provide additional stimulus to the economy.”

The International Monetary Fund last week raised its growth forecast for the Philippines to 6.8% for this year, taking into account fiscal stimulus from a planned increase in state spending and from an expected uptick in exports as global growth recovers. As of end-November, export receipts posted a 5.2% decline from a year ago, compared to a 3% drop expected by the government for 2016.

Supporting the local economy are remittances from overseas Filipino workers which reached $24.341 billion in the 11 months to November, coupled with a steady influx of foreign direct investments, the report added.

The analysts see 2017 growth at 7-7.5%, faster than the 6.5-7% range they had projected for 2016 and within the government’s 6.57.5% GDP growth target.

Investments are expected to lead economic expansion, coupled by strong household spending the government’s “aggressive” infrastructure push, the report added.

Apart from improving macroeconomic figures, the research group said more families saw better living conditions last year as more Filipinos got hired, and that could have brought down the poverty rate.