Domestic demand to grow Phl economy near 6% – ING Bank

Despite the persistent weakness in exports, ING Bank is betting that the Philippine economy will expand around 6 percent this year as domestic demand remains strong, according to a report from GMA News.

"Export markets remain weak and are likely to remain weak. However, overall PHL growth is domestically demand driven," Joey Cuyegkeng, senior economist at ING Bank in Manila, said in a commentary.

Philippine merchandise exports decreased by 6.3 percent to $5.13 billion in August from $5.47 billion a year earlier, according to data from the Philippine Statistics Authority.

Government spending is expected to grow the country's gross domestic product (GDP) alongside consumer spending and private sector investments.

ING Bank sees public infrastructure spending staying robust until next year. But the ban on new projects during the election period may put the lid on spending growth in the first half of 2016.

"Government’s efforts to activate procurement processes ahead of the election ban in mid-January/February are crucial to support GDP growth which may be moderated by the El Niño," Cuyegkeng said.

A strong domestic demand, along with sustained government spending, is expected to push overall economic growth above 6 percent in 2016.

"Efficiently utilizing the fiscal leeway would support growth. The deficit for the first eight months is only P3.4 billion. This is way below the full-year deficit target of P283 billion," Cuyegkeng said.

The country's GDP expanded by 5.3 percent during the first half. The domestic economy must grow over 6 percent from July to December to meet the full-year 6 percent forecast.