Moody’s lowers PH GDP growth projection to 5.7% in 2015

While Manila-based investment banking firm First Metro Investment Corp. (FMIC) still believes the Philippine economy could grow to 6 percent, international debt watcher Moody's Investors Service has further downgraded its growth target for 2015 Philippine gross domestic product (GDP) from 6 percent to 5.7 percent.

“In the Philippines, slowing export growth and fiscal underspending weighed on output in the first half of the year. On the supply side, the El Niño-related dry spell hurt agricultural production, contributing to our lower GDP growth forecast of 5.7 percent for 2015,” Moody’s said in its latest report released on Tuesday.

In June, the debt watcher already lowered its GDP growth forecast for the Philippines to 6 percent from the earlier targets of 6.5 percent and 6.7.

The government had earlier set a 7 percent to 8 percent growth target this year but Socioeconomic Planning Secretary Arsenio Balisacan recently said the country's GDP growth would just likely settle at around 6.0 percent to 6.5 percent.

FMIC also released its monthly report on Tuesday where it indicated its revised outlook for the Philippine economy.

“The acceleration in government spending provides clear hope that the economy will pick up in the second half, especially as candidates for the May, 2016 elections open their war chests. We do expect second half growth to recover to 7 percent and so end the year slightly above 6 percent,” FMIC said.

In the first half of the year, the Philippine GDP grew 5.3 percent.

“Economic indicators, such as new jobs, Meralco [Manila Electric Co.] sales, industrial production and exports, slowed down in June and also for the Q2-2015. The even lower 1.2 percent inflation rate for June, however, provided a positive spin, but consumers have not opened their wallets to spend,” the report said.

Nevertheless, Moody’s expects fiscal disbursements to accelerate in the second half, and to see further progress on infrastructure development related to the government’s public private partnership program.

For its part, FMIC also said it sees good second quarter profit figures from companies, especially those that are listed in the Philippine Stock Exchange.

“Despite the falling inflation rates due to lower rice and food prices, and continuing weakness of crude oil prices, domestic demand has not picked up pace in Q2. El Niño may have dried up farmers’ incomes, while firms benefiting from lower costs due to falling input prices have likely passed