Economic planner sees Q1 GDP growing at least 6.5-7%

THE PHILIPPINE ECONOMY is expected to expand between 6.5% and 7.0% in the first quarter or faster, the socioeconomic planning secretary said on Thursday, putting the government on track to meet its full-year target.

The Philippines is among the world’s fastest-growing economies with gross domestic product (GDP) expanding by 6.8% in 2016, a three-year high.

Robust consumption and increased infrastructure spending, which spurred last year’s growth, continued to fuel economic activity, said Ernesto M. Pernia, director- general of the National Economic and Development Authority (NEDA).

They should also bolster the country’s defences against any economic fallout from Brexit, potential protectionist measures in the United States and divergent monetary policies around the world, the NEDA chief said.

“First-quarter growth will be in the neighbourhood of 6.5-7.0%, maybe even more,” he said.

DRIVERS

The government has pledged to raise infrastructure spending to 5.2% of GDP this year from the projected 5% of GDP last year.

Mr. Pernia expects exports to perform better this year after declining 4.4% in 2016, as the government anticipates increased demand from China and Russia.

President Rodrigo R. Duterte has carried out a stunning U- turn in the Philippines’ foreign policy since assuming office last year, aggressively pursuing tighter business and defense ties with China and Russia and weaning the country off dependence on long-time ally the United States.

“China is ramping up its importation of (Philippine) products and Russia said it will increase its demand for agriculture products,” Mr. Pernia said.

China said on Wednesday it signed $1.74 billion worth of contracts to import Philippine products, such as fruits and lumber, during Vice-Premier Wang Yang’s recent trip to Manila.

Mr. Pernia said full- year growth could be in the “midpoint” of the government’s 6.5-7.5% forecast range, bolstering expectations that the central bank may raise rates for the first time this year in more than two years to temper rising inflation.

Annual inflation was recorded at 3.3% in February, the fastest pace in 27 months.

While it remains within the central bank’s preferred range, the rate has moved closer to the top end of its 2-4% target.

The Monetary Board of the Bangko Sentral ng Pilipinas kept its benchmark interest rate unchanged later on Thursday, but some economists said it would likely pull the rate-hike trigger at its next policy meeting in May. —