The Philippine economy likely grew at a slower pace of 6 percent in the first quarter of 2014 compared with the 7.7 percent expansion recorded a year earlier, given the relatively weak indicators seen so far this year.
“Economic indicators released in March showed the Philippine economy leading off to a good, albeit not exceptional, start for the year,” financial firm First Metro Investments Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said in the April issue of their Capital Markets Research alliance’s publication, The Market Call.
The report’s 6 percent GDP projection for the first quarter is lower than the government’s 6.5-percent to 7.5 percent growth target for the year and the 6.5 percent expansion recorded in the fourth quarter of 2013.
FMIC and UA&P said a slew of relatively weak signals point to slower growth in the first quarter. They noted, for example, that electricity sales of Manila Electric Co. for the first two months of the year barely climbed by an average 1.4 percent, as its year-on-year growth in sales had been soft at 1.8 percent in January and 1.0 percent in February.
“Cooler temperatures and higher electricity rates led consumers to be judicious in their electrical consumption,” the report stated.
Also, industrial production, as measured by the volume of production index (VoPI), slowed to 7.2 percent in January after posting six consecutive months of double-digit gains.
Tax collections of the Bureau of Internal Revenue (BIR) for January expanded by only 10 percent or some 4 percentage points from the 2013 performance.
Besides the weak growth indicators, the report added that the slow pace of reconstruction work in typhoon-stricken areas, coupled with a high base last year, should also contribute to slower growth for the first quarter of the year.
“Nonetheless, a strong rebound should commence in the second quarter when reconstruction starts in earnest, enabling the economy to still post another above-7 percent GDP growth for 2014,” it said.
FMIC and UA&P said that domestic demand, which had been affected by the lingering effects of Super Typhoon Yolanda [Haiyan], is set to recover sharply in the second quarter.
They said that domestic demand should be buoyed by reconstruction work in typhoon-affected areas and by stronger consumer spending because of the high growth in remittances from overseas Filipinos and exports.
The report said exports expanded at an almost double-digit pace in January while OFW remittances in January surprised the market with a 7 percent rise.