‘Q3 growth not enough to meet year-end target’
THE country’s economy may have grown faster in the third quarter of the year, but that would be insufficient to meet the government’s year-end growth target, analysts said on Thursday.
In separate statements released after the National Economic and Development Authority and the Philippine Statistics Authority announced that gross domestic product (GDP) growth picked up to 6.2 percent from 5.5 percent in the second quarter, economists said full-year economic growth could still fall below the lower end of the government’s 6.0 to 7.0-percent goal.
Security Bank Chief Economist Robert Dan Roces said the 6.7-percent growth the country needed to post in the fourth quarter “might be too steep,” and because of this his bank would keep its Octobern to-December GDP forecast at 6.5 percent.
According to him, the full-year average is projected to hit 5.9 percent.
“Benign CPI (consumer price index) coming into the fourth quarter will stimulate consumption even further. This higher consumption will again push growth above the 6-percent threshold,” Roces said.
For its part, HSBC expects full-year growth to settle at 5.7 percent, noting that the thirdquarter growth pick- up “was broad-based.”
“Private consumption grew at a faster pace due [ to] stable remittances growth, declining unemployment and a pick-up in consumer confidence. Government consumption also rose sequentially, with fiscal spending no longer curbed by the delayed passage of the 2019 budget and the midterm elections in May,” HSBC said.
“Moreover, fixed investment bounced back in Q3 after a contraction in the previous quarter, helped by increased government spending on infrastructure and the Bangko Sentral ng Pilipinas’ recent policy rate and reserve requirement ratio
cuts,” it added.
HSBC forecasts 2020 growth to rise to 6.3 percent, supported by a sustained private consumption and a fixed investment growth outlook.
Capital Economics economist for Asia Alex Holmes also said growth would continue to speed up in the fourth quarter, but not enough to meet the year-end target.
“[ W] e don’t think Q3’ s strong figures mark the start of a sustained rebound. On the plus side, consumption should continue to grow
at a decent rate, helped in part by a sharp slowdown in inflation, which will have boosted consumer’s purchasing power,” Holmes said.
“However, stronger consumption and lower interest rates are likely to be offset by drags from elsewhere. Exports are likely to remain weak, if, as we expect, global growth continues to ease,” it added.
“Meanwhile, with the budget for 2020 envisaging an unchanged deficit of 3.2 percent of GDP, we think the boost from government spending will prove temporary.”
The Philippine economy could grow by 6.0 percent next year, according to the economist.