NEDA sees PHL growth momentum continuing amid rising global trade
THE economy may sustain the economic growth momentum of 2016, with forecasts by multilateral lenders expected to be achieved amid a global wave of rising trade, the government’s chief economic planner said.
“I think for the year, World Bank is 6.9%, IMF (International Monetary Fund) is 6.8%, so we should be able to achieve that this year,” Socioeconomic Planning Secretary Ernesto M. Pernia told reporters last Friday at the Finance department headquarters in Manila, noting that these forecasts for gross domestic product growth are conservative.
If realized, growth could continue on the path of 2016, during which the economy grew an upwardly-adjusted 6.9%.
The National Economic and Development Authority has taken the view that the global economy is recovering, he said.
“[The] EU (European Union) is doing better than expected, also Japan,” he said when asked about the drivers of sustained growth.
The United Nations Economic and Social Commission for Asia and the Pacific also gave a similar outlook at 6.9%, while the Asian Development Bank projects a lower 6.4% expansion.
The World Bank expects global economic growth to rise by 2.7% this year on increasing manufacturing and trade, rising market confidence, and stabilizing commodity prices.
The multi- agency Development Budget Coordination Committee raised its assumptions for export growth recently due to the “observation that global trade is picking up” to an average of 5% this year, from the previous 2% assumption, while raising its view to 7% and 9% for 2018 and 2019, respectively, from 5% and 7%.
For 2020-2022 however, the 9% projection was maintained.
Mr. Pernia was also bullish for the growth rate for the second quarter not only due to recovering exports, but also improving agriculture output.
“Q2, I think it will be better, given, if you look at leading indicators... Exports, agri[culture] are improving,” he said.
“I think it would pick up, Q2 will be higher than Q1, I think it will approach seven (percent),” he said.
The first quarter saw a lowerthan-expected 6.4% growth rate, due to the higher base of government spending in the year-earlier period, when disbursements were high ahead of the national elections.
The agriculture sector grew 4.9% growth in the first quarter picking up from the 1.3% decline in the previous three-month period.
Merchandise exports have continued to grow since the start of the year, rising 22% in January (from a 2.3% contraction a year earlier), 8.7% in February (from a 3.4% decline), 18.1% in March (from a 13% decline), and 12.1% in April (from a 3.4% decline).
Asked whether a persistent trade deficit will affect the overall outlook, Mr. Pernia said that there won’t be any problems on this front, given that the amount of imports are composed mostly of inputs for production.
“As long as the composition of exports is heavily weighted towards capital goods and intermediate products that go into production, it will expand the economy,” he said.
In April, capital goods accounted for 33.3% of the total imports.
Mr. Pernia also noted that the Marawi unrest, and the possible tourism losses from the Resorts World Manila attack won’t make a dent on the country’s economic output.
“These are very short- lived, ephemeral, passing incidents. It’s not something that’s really going to have an impact,” he said.
“Those are temporary jitters, which will dissipate right away. We have to be upbeat,” he added.