FMIC, UA&P see 2017 GDP growth of at least 7%

THE economy is expected to post at least a 7% expansion this year, as it sustains the momentum of strong investment-led growth, backed by foreign inflows and jacked-up infrastructure spending, analysts at First Metro Investment Corp. (FMIC) said yesterday.

“The Philippine economy is expected to record stronger growth in H1 (first half ) and hit a 7% [or higher] full-year growth as robust investment spending continues and foreign direct investment perks up,” according to the June issue of the Market Call released by FMIC and the University of Asia & the Pacific (UA&P).

If realized, it would put the economy at the midpoint of the government’s 6.5-7.5% gross domestic product (GDP) target for 2017.

The economy in the first quarter grew by a lower-than-expected 6.4%, from 7% a year earlier, and lower than the 6.6% in the fourth quarter.

The Philippine Statistics Authority (PSA) is expected to report second quarter GDP by midAugust. Socioeconomic Planning Secretary Ernesto M. Pernia said that GDP is likely to grow 7% this quarter.

The analysts said that the manufacturing sector will maintain its double-digit growth in the second quarter, amid high levels of capital goods imports.

“The two, underpinned by FDIs ( foreign direct investments) and heavier infrastructure spending, should keep the shine on the country’s investmentled growth,” the report read.

However, latest PSA show that FDI pledges fell by 12.8% year on year to P22.883 billion in the first quarter.

Merchandise exports however grew 18.3% to $15.513 billion during the same period, while imports saw an 18.6% uptick to $22.053 billion.

The Market Call report said household spending should recover this quarter as a result of a rise in the impact of remittances due to a weaker peso, and a slowdown in price growth.

The Bangko Sentral ng Pilipinas reported last month that first quarter remittances grew 7.7%. However, in its latest estimates, it maintained a 4% forecast for remittance growth this year amid US President Donald J. Trump’s protectionist policies on immigration and trade.

The government’s plan to hike infrastructure spending is also expected to shore up domestic demand.

“...We expect public construction to regain its double- digit growth pace starting Q2 (second quarter), so that domestic demand should be more robust for the next quarter,” it added.

Budget Secretary Benjamin E. Diokno said earlier that higher infrastructure spending levels will kick in this quarter, with the coming of dry periods appropriate for construction. —