Analysts hike 2015 GDP estimates

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Estimates to Philippine economic growth this year have been revised upwards following the stronger-than-expected 6.9-percent expansion in the fourth quarter of 2014.

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Analysts at Citi Research, JP Morgan and DBS, said the growth of country’s gross domestic product (GDP) could range from 6.5 percent to 6.7 percent in 2015 on the back of upbeat private and public spending, and the upside surprise in consumption.

Although higher than the 6.1-percent average GDP growth in 2014, their estimates still fell below the government’s growth target for this year which is set at 7 percent to 8 percent.

Citi Research said it upgraded its 2015 growth outlook to 6.7 percent from its previous projection of 6.3 percent.

It said the momentum in the fourth quarter of 2014 alongside upbeat private and public spending would allow for strong 2015 growth.

“Investments to GDP would probably be in the 22 percent to 23 percent range for 2015 to 2016 although peak growth for construction and durable equipment should be in 2015,” it stated.

Meanwhile, JP Morgan’s Asia Pacific Equity Research said its economic team revised their 2015 estimates for GDP growth from 5.4 percent to 6.4 percent.

“The 2014 GDP growth surprises on the upside, paves the way for its 2015 estimates GDP growth upgrades,” it stated.

JP Morgan pointed out that the key highlight of the 6.1 percent GDP print in 2014 was the recovery of government spending in the fourth quarter which assuages concerns regarding the potential pull factor from the government infrastructure spending bottlenecks.

“The government has explicitly committed that it has already taken concrete measures to accelerate spending this year and is guiding that it will perform better over the next 12 months,” it said.

JP Morgan is also confident on growth over the next few quarters as consumption remains robust and the government is expected to accelerate spending ahead of the six-month moratorium on project approvals prior to the May 2016 national elections.

On the other hand, Singaporean bank DBS sees 2015 GDP growth at 6.3 percent from its previous forecast of 6.2 percent. A turnaround in government spending, almost 10 percent growth in the fourth quarter, proved to be the key difference after the contraction seen in the third quarter.

“And we expect government spending to remain supportive of overall GDP growth this year, ahead of next year’s elections,” it said.

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