GDP Q1 growth seen slowing from Q4


EstimateS by private economists on first-quarter growth in gross domestic product (GDP) stood wide apart between 6 percent and 7.3 percent, but with most of them agreeing that January to March likely saw a slowdown from the 6.9 percent recorded in the quarter earlier.

The forecast range also falls below the government’s 7 percent to 8 percent growth assumption for this year.

However, the estimates were all higher compared with the 5.6 percent expansion achieved in the first quarter of 2014.

The official first-quarter GDP data is due for release on Thursday, May 28.

Moody’s most optimistic
Except for Moody’s Analytics, which gave the most optimistic estimate of 7.3 percent growth in the first three months of 2015, eight other economists from banks and a think tank reached a consensus growth estimate of between 6 percent and 6.8 percent.

“Higher infrastructure investment and government spending, alongside robust domestic demand, make the Philippines one of Asia’s strongest performing economies,” the unit of the credit ratings agency said.

At the lower end of the forecast spectrum, however, is Izumi Devalier of global bank HSBC, who expects the data to show the least upbeat 6 percent growth in the quarter.

HSBC, DBS see export slowdown
“Net exports are likely to be a substantial drag in the first quarter of 2015 as outbound shipment weakened,” Devalier said.

The latest government data showed that merchandise exports for the quarter dipped 0.2 percent to $14.247 billion from $14.277 billion in 2014.

Gundy Cahyadi, economist at Singapore-based DBS Bank who has a 6.1 percent growth estimate, notes resilient domestic demand but also sees a slower pace in exports.

“We continue to see resilient domestic demand, while export growth is likely to remain supportive even if slower than the pace seen in the past couple of years,” he said.

Pauline Revillas, analyst at the Metrobank Research, also expects GDP growth of 6.1 percent year-on-year in the January to March period.

“[Growth was] supported by robust consumption spending . . . underpinned by solid remittance flows and benign inflation amid the fall in oil prices,” she said.

Revillas also took note of the rebound in investment spending as reflected by strong car sales during the quarter, a pick-up in public expenditure as the government started frontloading election-related spending and a strong services sector.

Maybank expects slower fixed investment
Luz Lorenzo, economist at Maybank ATR Kim Eng, expects to see a 6.4 percent expansion, driven by private consumption and fixed investments.

But she added: “Government spending on consumption and construction is likely to continue to grow but perhaps at a slower rate than in the fourth quarter of 2014.”

Lorenzo noted that net exports may have slowed against imports, which she saw as having been given a temporary lift by the easing of the port congestion problem.

The “national government data on the budget has not been released, so upside or downside risks are likely to be coming from this area,” she warned.

Victor Abola, economist at the University of Asia and the Pacific, said GDP may have expanded by 6.8 percent in the first quarter driven by government infrastructure spending, consumer spending due to low oil prices, and stable food prices.

“Higher infrastructure spending may be deduced from strong growth in cement output in January to February of this year,” he said.

BPI, Accord see slackening from Q4
Earlier estimates by Bank of the Philippine Islands and Accord Capital Equities Corp. described a slowdown in first-quarter GDP from a quarter ago.

Justino Calaycaly Jr., analyst at equities firm Accord Capital Equities Corp. predicted growth in the 6.4 percent to 6.7 percent range.

“We think that the key driver for GDP in the first quarter would be the spillover of consumer spending from the holidays induced in the fourth quarter of 2014, which in no small way got a significant boost from the huge fall in oil prices and the relatively benign inflation–thus expanding purchasing power,” Calaycay explained.

Nicholas Antonio Mapa, associate economist at BPI, said GDP in the three months to March likely rose 6.8 percent on the back of consumption and investments under the expenditure account.

Mapa noted that car sales, a key contributor to the durable equipment component of investments, recorded very strong sales in the first few months of the year.

But he pointed out that while consumption remains robust, its growth pace may have been weighed down by slower remittance inflows recorded in January and February.

“On the income side it would still be the services sector driving our growth on retail trade and financial intermediation. Trading gains from large banks are seen driving this sector,” he added.

Recently, the International Monetary Fund (IMF) estimated that first-quarter growth gained pace from a year earlier, but slackened from the preceding quarter given weaker exports.


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  1. Moody’s and other ratings agencies have their own vested interests in embellishing the Philippines’ economic numbers. What do you expect from a group that criminally endorsed derivatives and credit default swaps before the great financial meltdown of 2008.