Private economists estimate 5.6%-6.8% Q2 expansion
The International Monetary Fund (IMF) and private economists expect second-quarter data on the Philippine economy to show accelerated growth as indicated by a rebound in public disbursement and sustained robust consumer spending during the period.
Such increase in spending must have offset weakness in agriculture output, manufacturing and exports in the three months to June, they said.
The IMF did not give a specific quarterly forecast figure, with its resident representative to the Philippines saying only that the multilateral financial institution expects the country’s economy to pick up gradually through the remainder of the year from 5.2 percent in the first quarter of 2015.
“We would expect the economy to have picked up slightly in the second quarter from the first-quarter level on improvement in government spending disbursements and a bottoming out of the export decline, although manufacturing activity remained weak and may have dragged down growth,” IMF representative Shanaka Jayanath Peiris told reporters in an email over the weekend.
But five other economists polled by The Manila Times see growth in gross domestic product (GDP) in the range of 5.6 percent and 6.8 percent for April to June, recovering from a slowdown at 5.2 percent in the first quarter.
The low end of their new forecast range, however, remains below the year-earlier growth pace of 6.4 percent, while the upper end shows only a moderate pick-up.
The government is scheduled to release the official second-quarter GDP data on Thursday this week.
The table below* shows the individual forecasts of the five economists for second-quarter GDP growth:
Having the most optimistic view are analysts from Moody’s Analytics, who see 6.8 percent growth in GDP for the period.
“Stronger government spending, thanks to delayed stimulus getting under way, likely lifted investment and household consumption,” the economic research arm of Moody’s Investors Service said.
The Moody’s unit expects government spending to be sustained during the rest of the year. “This boost will continue through the second half of 2015,” it said.
Earlier, ING Bank Manila had predicted a faster rate of growth of 6 percent for the second quarter on the back of increased government spending.
At the Bank of the Philippine Islands (BPI), lead economist and Vice President Emilio Neri Jr. said his team is looking at 5.8 percent year-on-year growth for the second quarter, seeing just a slight improvement from the first quarter as poor weather conditions continued to weigh on output.
“Agriculture and manufacturing will be drags due to El Niño but national government spending offsets that a bit for a slightly better print than in the first quarter,” he said.
The agriculture sector has posted a decline in output in current gross value terms by 5.21 percent in the second quarter of the year to P372.40 billion. In constant terms, that meant a drop of 0.37 percent.
The reseach arm of Metropolitan Bank and Trust Co. (Metrobank), meanwhile, estimates GDP for the quarter has improved slightly to 5.7 percent on the back of still solid consumption.
Metrobank Reseach analyst Pauline Revillas said the forecast also incorporates slow government spending, weak external trade, agriculture sector, and manufacturing sector.
The estimated range of GDP growth given by Accord Capital Equities Corp. shows a weaker low end of 5.6 percent compared with that of Metrobank Research, but the other end of the range stands higher at 5.9 percent.
“We think that second-quarter [growth]will be better than the first quarter’s 5.2 percent. But given the surprises we’ve had in the last five quarters, we wouldn’t be remiss in warning of yet another one,” Justino Calaycay Jr. said.
Calaycay explained there were challenges that still affected growth during the period, particularly coming from the manufacturing and exports sectors, which have remained weak.
“Nonetheless, we believe that both consumer and public spending would’ve ramped up in the April-to-June period,” he added.
The analyst from Accord Capital cited cyclical conditions that must have boosted spending in the quarter, such as the summer season, which likely saw a hike in the frequency of travel and electricity consumption; and the subsequent start of the academic year.
Govt spending up 15%
The bigger figures for government spending in the April to June period—rising 15 percent to P581.2 billion from P505.2 billion in the corresponding period of 2014 and P504 billion in the first quarter —fueled the economists’ expectations for improved growth in the overall economy as well.
The economists explained that the increase in such spending made up for the slack in merchandise exports, which still registered a 3.3 percent decline in June despite having eased from a 17.4 percent slide in May and a 4.1 percent drop in April.
Improved spending in the second quarter also helped offset a slack in manufacturing, which posted a 3.6 percent decline in June after a 2 percent drop in May and a modest 1 percent expansion in April.
H2 recovery in global demand
Going forward, the IMF said the second half of 2015 is anticipated to be stronger than the first half as global demand recovers and government spending accelerates further.
For full-year 2015, the IMF has a growth outlook of 6.2 percent for the Philippines. That, however, still stands below the government target of 7 percent to 8 percent annual growth for 2015 and 2016.