DEBTWATCHER Fitch Ratings retained a 6.3 percent growth forecast for the Philippine economy this year but said slow government spending continues to pose a risk.
The latest expectations from Fitch compare with the 6.1 percent expansion last year and the 7 percent to 8 percent gross domestic product (GDP) growth target of the government for 2015 and 2016.
In its Asia Pacific Sovereign Overview for the second quarter released on Tuesday, Fitch attributed the slower 5.2 percent GDP results to weak government spending in the first quarter.
“Fitch does not expect a significant pickup in public investment as bottlenecks remain with respect to disbursement of public funds,” the credit rating agency noted.
Latest data from the government showed that as of endApril, public expenditures totaled P660 billion, up by a mere 5 percent from a year earlier.
A narrow revenue base in the country is likely to prevent a material increase in public spending, Fitch noted.
Total revenues reached P679 billion in January to April, up 9 percent from the same period in 2014.
Earlier, most analysts left their growth forecasts unchanged for the whole of 2015.
Analysts from the Bank of the Philippine Islands (BPI) kept their growth forecast for 2015 steady, although slightly lower at 6.5 percent, saying that government spending is likely to recover in the second half of the year.
UKbased investment bank Barclays also sees the economy growing by 6.5 percent this year, but qualified its position by saying this hinges on the capacity of the economy to rebound by the second quarter.
While the Philippines’ real GDP growth slowed to 5.2 percent yearonyear in the first quarter from the revised 6.6 percent in the fourth quarter of 2014, Global think tank BMI Research still expects a strong domestic demand to provide a measure of support for the economy.
BMI Research analysts are keeping their forecast at 6 percent, but warned that a slowdown in exports may pose downside risk.
In a contrarian view, Moody’s Investors Service recently trimmed down its growth forecast for the Philippines to 6 percent this year compared with a previous projection of 6.5 percent, citing bottlenecks in the government’s budget execution.
Singaporebased DBS Bank and SB Equities Inc., the equities brokerage arm of Security Bank Corp., made downward adjustments to their Philippine GDP projections for 2015.
DBS cut its growth forecast to 6 percent from a previous projection of 6.3 percent, while SB Equities reduced its GDP expectations to 6.4 percent from 6.7 percent.
The International Monetary Fund (IMF) had said it was set to review its 6.7-percent Philippine growth outlook for the full year to consider the impact of the weaker-than-expected performance in the first quarter.