Joint report of First Metro–UA&P think tank:

‘Early Q3 data signals H2 growth pick-up’

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Preliminary economic data for the current quarter of 2015 indicates growth is regaining its pace in the second half of the year, a joint report by think tanks First Metro Investments Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said.

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The comparative economic performance in terms of gross domestic product (GDP) in the first six months had failed the forecasts by both government and private economists, slowing to 5.3 percent from 6.2 percent a year earlier.

The government had set a target growth range of 7 percent to 8 percent for the full year.

The FMIC-UA&P’s September issue of The Market Call said economic data appeared more supportive of faster growth in the second half given the low-inflation environment, increased government spending and an expected recovery in merchandise exports.

Headline inflation in July eased to 0.8 percent before decelerating further to an all-time low of 0.6 percent in August.

Prices easing
Citing low inflation levels in the first two months of the third quarter, the report said the rise in consumer prices is expected to decelerate further during the rest of the quarter to average below 1 percent.

“We maintain our view that inflation will continue to be soft in the third quarter and average below 1 percent, aided by weak crude oil prices and stable to lower food prices,” it said.

FMIC and UA&P also noted that fiscal spending finally stepped up in July, posting 25 percent year-on-year growth.

“Infrastructure spending and capital outlays shot up by 93 percent, vindicating the continuing efforts especially by the DPWH (Department of Public Works and Highways) to meet the infrastructure spending goal of 4 percent of gross domestic product this year,” their joint report pointed out.

The think tanks said the current weakness in exports remains a negative for the economy, but that they believe exports growth would get back on positive track in the second half as the US economy continues to stride forward. Meanwhile, the Eurozone showed surprising gains in the second quarter.

“Exports’ softness is likely to change in the second half as US and Eurozone growth pulls up demand for Philippine products, albeit at a single-digit pace,” the report said.

FMIC and UA&P agree that full-year growth for the Philippine economy this year would be 6.2 percent.

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