The Philippine economy may have grown as high as 8.5 percent during the second quarter of the year amid first-quarter growth momentum and election spending, a top First Metro Investment Corp. (FMIC) official said.
FMIC President Roberto Juanchito Dispo said the company projects second-quarter gross domestic product (GDP) growth to easily exceed 8 percent as the economy benefited from strong consumption spending fueled by election expenditure and government infrastructure outlay.
“Growth may ease slightly in the second half, nevertheless full-year growth will surpass government’s full-year target of 6 percent to 7 percent,” Dispo said. FMIC initially forecasted GDP to grow only by 7.5 percent to 8 percent during the second quarter of the year.
Eclipsing China’s 7.7-percent GDP growth, the Philippine economy grew 7.8 percent in the first quarter, becoming Southeast Asia’s fastest-growing economy.
According to FMIC, the country’s first-quarter GDP was boosted mainly by strong performance of the services sector, robust construction spending and the resurgence of manufacturing. On the demand side, consumer spending and government spending provided support to the economy, growing at a healthy pace of 5.1 percent and 13.2 percent year-on-year, respectively, FMIC added.
“Historically, the local economy has been off to a strong start in the first quarter of election years and has picked up momentum in the second quarter,” First Metro Research head Cristina Ulang noted.
“Our proprietary model shows that election and government infrastructure spending peaked in the second quarter as seen in the last three elections, firing up Philippine consumption, which is about three quarters of the domestic economy,” she added.
FMIC is the investment-banking arm of the Metrobank Group.
Moody’s sees 7.2% Q2 growth
Meanwhile, Moody’s Analytics said that the Philippine economy likely grew by 7.2 percent in the second quarter of the year.
Katrina Ell, associate economist in Moody’s Analytics, in a commentary said that the country likely recorded another smashing quarter in the three months to June.
“Despite softness in the global economy, we look for 7.2-percent year-on-year GDP growth, following the March quarter’s 8 percent,” she said.
The economist also said that the Philippines may grow 6.5 percent this year and in 2014.
“We expect full-year GDP growth to be around 6.5 percent in 2013 and 2014, making the Philippines one of the world’s fastest-growing economies,” she said.
Ell noted that manufacturing is going strong amid solid domestic demand, offsetting softness in export-facing sectors.
The economist also cited private consumption as one of the factors of the growing economy.
“Private consumption is getting an additional boost from remittances, which have held up well through weaker global demand,” she stated.
Personal remittances from overseas Filipino workers remained robust at the first half of the year as it soared by 6.2 percent to $11.8 billion.
Ell also noted that business process outsourcing (BPO) is a bright spot in the external sector, as less-competitive industries including electronics have faded.
“The Philippines accounts for 15 percent of the global BPO market, and BPO represents 13 percent of total exports, compared with 6 percent in 1999,” she added.
Ell also praised President Benigno Aquino 3rd who “is rightly credited with helping turn the Philippines’ economy away from perennial disappointment.”
“Since taking the helm in 2010, Aquino has set the economy on the right course via infrastructure development, with a focus on upgrading transport links; an anticorruption push; a drive to halt tax avoidance and improved government coffers. Continued success will depend on who takes the reins when Aquino steps down in 2016,” she added.
Moody’s Analytics is a division of Moody’s Corp. that provides expertise in economic and consumer credit analysis, credit research and risk measurement, enterprise risk management and structured analytics and valuation.
WITH A REPORT FROM MAYVELIN U. CARABALLO