Still up from 5.9% in 2015 despite Q4 2016 slowdown
Philippine economic growth in the fourth quarter of 2016 likely slowed from the third quarter and the year-earlier rates, most analysts polled by The Manila Times said, but their estimates for the whole of last year still averaged higher than the revised 5.9 percent increase achieved in 2015.
Most of the nine analysts who made their forecasts for last year, except one, estimate that gross domestic product (GDP) in the October to December quarter grew at a slower pace of between 6.0 percent and 6.9 percent. That range compares with 7.1 percent posted in the third quarter, and a revised 6.5 percent in the year-earlier period.
Only one of them—Moody’s Analytics economist Jack Chambers—saw growth stepping up in the fourth quarter to 7.2 percent.
For the full year, their estimates of GDP growth range from 6.7 percent to 7 percent, leading to an average of 6.9 percent. That compares with the government’s official target of 6 percent to 7 percent.
The official 2016 GDP report is scheduled for release by the Philippine Statistics Authority this Thursday.
Chambers, the economist at Moody’s Analytics, has the most optimistic view of 2016 for the Philippines, expecting growth to have accelerated to 7.2 percent in the final quarter.
“This would be the seventh consecutive quarter in which year-on-year GDP growth accelerated. The main driver of output growth will continue to be domestic demand, with private consumption and investment both expanding rapidly,” he said in an emailed response to the Times poll.
Chambers added that goods exports should also post a modest improvement over previous quarters on the back of an uptick in global demand in recent months.
Land Bank of the Philippines market economist Guian Angelo Dumalagan sees fourth-quarter growth at 6.9 percent, bringing the full-year average to between 6.9 percent and 7 percent.
“Growth probably decelerated last quarter due to weaker-than-expected exports and softer agricultural production. These downward pressures might have partly offset the impact of stronger consumer demand during the three-month period,” he explained.
Overall, he said, domestic growth last year likely eclipsed 2015’s average expansion of 5.9 percent primarily because of increased election spending in 2016.
Metrobank Research analyst Pauline Revillas expects the fourth quarter 2016 GDP to come in at 6.8 percent, bringing her full-year average growth estimate to 6.9 percent.
Standard Chartered Bank economist Chidu Narayanan said growth in the quarter likely remained strong at 6.7 percent, driven by still-robust domestic demand and continued services-sector growth.
“We expect household consumption to have remained strong during the holiday period in Q4, supporting robust growth,” he said, seeing the likelihood that manufacturing growth remained strong in the fourth quarter at more than 6 percent.
Bank of the Philippine Islands (BPI) Vice President and lead economist Emilio Neri Jr. said the economy in the fourth quarter possibly registered a 6.6 percent increase as the government sustained spending just as the private sector continued to boost fixed capital outlays.
“Household spending likely remained one of the strongest in the region but higher oil prices may have been a slight damper,” Neri said.
“Agriculture reverted to a contraction due to bad weather, but industry and services likely managed to sustain their rapid growth, led by construction and trade. The transport sector may have been mildly weighed down by higher petroleum prices quarter-on-quarter,” he explained further.
Chief economist Rajiv Biswas of IHS Markit said the Philippines’ GDP growth rate is estimated to moderate to 6.5 percent year-on-year in the fourth quarter of 2016.
“The manufacturing sector showed very rapid expansion, helped by strong domestic demand. However, one sector that acted as a drag on growth was manufacturing exports, with electronics exports remaining weak despite a pickup in global electronics demand in H2 2016 that helped to boost electronics exports in other East Asian economies, such as Taiwan and Singapore,” he said.
Nevertheless, he said, annual GDP growth in 2016 is estimated to be 6.8 percent year-on-year, the fifth successive year of rapid economic growth for the Philippine economy.
Deutsch Bank economist Diana del Rosario also said the economy likely grew 6.5 percent in the three months to December “as economic activity normalized past the May 2016 elections.”
ANZ Research economist Eugenia Victorino expects Philippines’ GDP growth to have eased to 6.1 percent in the fourth quarter, for a 2016 average of 6.7 percent.
“Quarterly growth in industrial production eased in the two months to November, indicating a weakening trend. Strong growth in public spending should have provided an offset and kept growth in total investment robust,” she said.
Providing the least optimistic view is DBS economist Gundy Cahyadi, who estimates the expansion in the economy at 6 percent during the quarter, and at 6.7 percent for full-year 2016. Cahyadi did not elaborate.