Q1 growth to disappoint as agri slows down — ING

The significant slowdown in agriculture may lead to disappointing gross domestic product (GDP) growth in the first quarter, according to Dutch financial giant ING Bank.

In a report, ING Bank Manila senior economist Joey Cuyegkeng said the weak agriculture turnout could shave 0.15 percentage points from its GDP growth forecast of 6.9 percent for the first quarter.

“Recent data may lead to a disappointing first quarter GDP report. We expect agriculture, which accounted for around 8.5 percent of GDP in 2017, to have registered a 3.3 percent increase,” he said.

The market is expecting a GDP growth of 6.8 percent in the first quarter from the revised 6.5 percent in the fourth quarter of last year. The government is set to release the economic data for the first quarter today.

Data released by the Philippine Statistics Authority (PSA) on Tuesday showed the agriculture sector posted a slower production growth of 1.5 percent in the first quarter compared to the 5.3 percent growth in the same period last year.

Cuyegkeng said a high base from 5.5 percent expansion in the first quarter as well as the contraction in the fisheries subsector accounted for the disappointment in the first quarter.

On the other hand, he said rice production grew by 4.6 percent in the first quarter, while farm gate prices rose five percent.

“This implies that incomes in the farming sector would have been quite strong. High inflation, however, may have moderated household spending,” he said.

Furthermore, the economist explained trade results in the first quarter were also not encouraging as exports contracted, while imports growth remained weak.

The country’s export earnings declined by 8.2 percent in March, while imports growth eased to 0.1 percent.

“In a growing world economy, exports would normally grow as well, but export contraction intensified in March… An economy that is expected to grow at close to seven percent in the next few years should see strong import growth,” he said.