Analysts said the Philippine economy in 2014 likely grew at a slower pace than the official target of 6.5 percent to 7.5 percent as the agriculture sector remained weak and as fiscal spending remained sluggish.
Despite their shared view that the country’s gross domestic product (GDP) recovered in the fourth quarter from a slower pace of 5.3 percent in the previous quarter, analysts still see full-year 2014 GDP ranging from 5.7 percent to 6 percent, slower than the 7.2 percent expansion in 2013.
The government is releasing the official GDP figures for 2014 today (Thursday).
Analysts said growth in the fourth quarter was likely driven by consumer spending, external trade, construction, private sector investments and the manufacturing sector.
However, they are still in doubt if the agriculture sector and government spending, which dragged on growth in the previous quarters, really recovered in the fourth quarter.
“We expect GDP to resume its upward trend starting the fourth quarter.
Already, we are seeing steadily accelerating Meralco electricity sales and exports averaging double-digit growth,” they said in the January issue of The Market Call.
FMIC and UA&P said growth should be underpinned by robust consumer spending “as the plunge in crude oil prices appears less transitory.”
Analysts at Singapore banking giant DBS shared the same view, saying GDP growth is likely to come in just below 6 percent in 2014, given the slower-than-expected fiscal disbursement last year.
“Exports are likely to offset some of the drag from fiscal spending, with
a double-digit expansion likely to have been witnessed last year,” the bank said.
Despite the slowdown in GDP growth, DBS said there are several encouraging developments to note.
It said growth in business services remains resilient and the manufacturing sector is playing an increasingly important role in the economy.
“Growth in the manufacturing sector has offset some of the drag from the construction sector and this is positive for the longer term as bulk of the overheating risks for the economy root from the excessively high growth in construction in 2012 to 2013,” it said.
Economists at the Bank of the Philippine Islands (BPI) said a 6.3-percent growth in the fourth quarter will support a full-year 2014 GDP growth of 5.9 percent.
“Merchandise exports, agriculture and construction may be key growth drivers. Government spending will determine whether the print outperforms or disappoints,” said BPI lead economist Emilio Neri Jr.
Nicholas Antonio Mapa, associate economist at BPI, said personal consumption expenditure and investments from the private sector in real estate and road vehicles also contributed to growth.
Drags to growth, however, are the lower output in the agricultural sector and underspending by the national government, he said.
Metrobank Research expects fourth-quarter growth to come in at 5.9 percent for a full-year average growth of 5.8 percent.
“The fourth-quarter growth can be attributed to sustained consumption spending, rebound of external trade, and solid performance of the manufacturing and (wholesale and retail) trade subsectors,” said Mabellene Reynaldo, research analyst at Metrobank Research.
ING Bank Manila said it expects GDP growth for 2014 to decline to 5.8 percent as fourth-quarter growth likely settled at 5.9 percent.
“The stronger-than-expected fourth quarter agriculture performance delivers some upside surprise,” said Joey Cuyegkeng, senior economist at ING Bank Manila.
Justino Calaycay, analyst at Accord Capital Equities Corp. said economic growth in the fourth quarter may have picked up to about 6.3 percent to 6.5 percent, which would pull the full-year figure to between 5.7 percent and 6 percent.
“Consumption should post a decent increase and significant contribution to the October to December period, particularly as we experienced a sharp fall in oil prices,” he said.