Q2 economic growth seen at 6.6%

The research arm of Moody’s Investors Service and British banking giant HSBC said the Philippine economy may have grown by a slower 6.6 percent in the second quarter from 6.8 percent in the first quarter.

In a report, Moody’s Analytics said the economy likely sustained its expansion in the second quarter on the back of robust remittances as well as higher consumer and government spending.

“Consumer spending is healthy,

thanks to steady inflows of overseas worker remittances and a firm labor market. Investment has been robust and is likely to remain strong, as the government boosts infrastructure development. External demand has remained solid,” Moody’s Analytics said.

It said there is a need to closely monitor inflation that continue to exceed the two to four percent target set by the Bangko Sentral ng Pilipinas (BSP).

“Although these factors likely supported a 6.6 percent GDP growth in the second quarter, rising price pressures need to be watched,” Moody’s Analytics said.

For its part, HSBC said the economic expansion in the second quarter may be slower due to weak exports and slower private consumption growth due to rising inflation.

“Weak export growth alongside elevated capital goods and raw materials imports likely dragged headline growth. Meanwhile, higher inflation and taxes this year are also likely to continue to restrain private consumption in the second quarter,” HSBC said.

HSBC said the GDP growth is seen picking up in the second half and may average at 6.8 percent this year, slightly faster than last year’s 6.7 percent. The BSP sees inflation rising further to a range of 5.1 to 5.8 percent in July from 5.2 percent in June due to higher utility rates, oil price and fare hike, imposition of higher excise tax on tobacco products, and more expensive food prices particularly rice.

The consumer price index averaged 4.3 percent in the first half, exceeding the two to four percent target set by the central bank.