Economists keep 2017 growth forecasts
Economists of investment banks see the country’s gross domestic product (GDP) growth recovering strongly after a weaker-thanexpected private consumption resulted to disappointing results in the first quarter of the year.
Credit Suisse economist Michael Wan said the surprisingly weak private consumption dragged the GDP growth to 6.4 percent in the first quarter of the year from 6.6 percent in the fourth quarter of last year.
Wan said private consumption eased to 5.7 percent from 6.2 percent while investment slowed down to 12 percent from 19 percent as government spending moderated to 0.2 percent from 4.5 percent.
On the other hand, exports picked up to 20 percent in the first quarter from 13 percent in the fourth quarter.
“Our expectation is for domestic demand to pick up from here, with more expansionary fiscal policy likely to underpin growth and public infrastructure to improve from here after a slow start,” he said.
Bulk of the fiscal spending, he said, has been devoted to sec- tors such as social spending, cash transfers to the poor, together with salary increase for public servants, all of which should provide support for private consumption, together with generally robust labor market trends.
Credit Suisse maintained its full-year GDP growth forecast at 6.4 percent this year from a high base of 6.8 percent last year. It expected GDP growth at 6.6 percent in the first quarter.
Euben Paracuelles, economist at Nomura Securities Ltd., said it is keeping its full-year forecast at 6.7 percent as government spending is seen accelerating with the strong push by the Duterte administration to implement public sector infrastructure projects.
“We maintain our 2017 GDP growth forecast at 6.7 percent. While Q1 growth disappointed, it remains robust,” he said. Nomura placed the Q1 GDP growth of the Philippines at 6.2 percent.
ANZ Bank economist Eugenia Victorino said the country’s GDP growth remained strong even as it missed expectations. ANZ Bank projected the GDP to grow by 7.2 percent in the first quarter.
“We hold on to our 2017 GDP growth forecast at 6.9 percent. Despite missing expectations, overall growth is running strong and balanced. The slowdown in construction and real estate is welcome and will likely ease worries of a property bubble,” she said.
ING Bank Manila economist Joey Cuyegkeng said economic activity for 2017 could easily achieve the lower end of the government’s target range of 6.5 to 7.5 percent.
“We are reviewing our full year forecast of 6.3 percent for a possible upward revision. We expect Q2 growth to also show slower yearon-year growth but would likely accelerate as government spending and infrastructure projects gather momentum,” he added.
For his part, DBS Bank economist Gundy Cahyadi said the bank is maintaining its call that GDP growth may moderate to 6.4 percent this year before inching back up to 6.7 percent in 2018.
“Strong export growth is likely to maintain support on the economy, but more importantly, we still regard current domestic momentum as being strong despite the moderation in Q1,” he said. DBS projected a GDP growth of 6.9 percent in the first quarter.