Steady 6.6% growth in Q1 seen

Investment bank Credit Suisse said the country’s economy expanded at a sustained pace of 6.6 percent in the first quarter of the year despite slower domestic demand.

In a research note, Michael Wan, economist at Credit Suisse, said the projected gross domestic product (GDP) growth in the first quarter was the same as in the fourth quarter of last year.

“We think the high frequency data point to 1Q17 GDP of around 6.6 percent, roughly unchanged from the previous quarter. If right, this will be below the government’s more optimistic forecast of seven percent, but still a robust number nonetheless,” he said.

Socioeconomic Planning Secretary Ernesto Pernia earlier said the country’s domestic output as measured by the GDP likely grew seven percent, the mid-range of the 6.5 to 7.5 percent growth target penned by economic managers for 2017.

Wan said fixed investment activity slowed down from robust levels of around 19 percent in line with the moderation in capital goods imports to 11 percent from 26 percent in the fourth quarter.

He added government spending was also off to a slow start this year with public infrastructure spending moderating to 14 percent from a robust 43 percent in the fourth quarter.

“Private consumption is the wild card since available high frequency indicators tend not to be very good at tracking private consumption. The data on this have been mixed, with motor sales and consumer goods imports moderating slightly, but manufacturing sales picking up,” Wan said.

He also reported merchandise exports picked up 17 percent in the first quarter of the year, driven by the rise in electronics shipments as well as textiles, machinery and transport.

“Strong exports should offset moderation in domestic demand,” he said.

Wan said export growth would moderate to mid-single digits for the rest of the year from mid-teens in line with the outlook for the rest of the Asia Pacific region.

Credit Suisse sees the country’s GDP growth easing to 6.4 percent this year after accelerating to 6.9 percent last year from 5.9 percent in 2015 amid robust domestic demand and higher investments.