ING sees Q2 GDP growth faster at 6%

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Expects higher govt infra spending than Q1

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ING Bank Manila said economic growth in the Philippines likely gained pace to 6 percent in the second quarter of 2015 from 5.2 percent in the first three months, expecting the push to have come from increased government spending.

However, growth in second-quarter gross domestic product (GDP) may have remained slower than the 6.7 percent recorded in the second quarter of 2014, it said.

A “positive development is the acceleration of government infrastructure spending in April and May, although the improvement in headline government spending relative to the first quarter of 2015 is a welcome development,” Joey Cuyegkeng, senior economist at ING Bank Manila, said.

Government spending on infrastructure and other capital outlays in April and May totaled P47.2 billion, up 34 percent from the P35.2 billion of such spending during the corresponding period in 2014, he said.

This brought the aggregate amount of government spending in April and May to P331.7 billion, surpassing the total spending of P188.5 billion during the first quarter of this year.
“The June fiscal performance is expected to show sustained headline government spending growth,” Cuyegkeng added.

The official figures for June have yet to be released by the Department of Budget and Management, but preliminary estimates by the agency showed government spending during the entire second quarter of 2015 likely grew at a double-digit pace of 12.4 percent from P505.2 billion a year earlier.

Economic growth could have been better in the second quarter if not for weak exports, which the National Economic and Development Authority (NEDA) said earlier could place a drag on GDP during the period.

Socioeconomic Planning Secretary and NEDA Director General Arsenio Balisacan said that merchandise exports took a hit in April and May.

Data from the Philippine Statistics Authority (PSA) showed exports in April fell to a two-year low, dropping 4.1 percent to $4.376 billion from $4.563 billion a year earlier.

Then in May, merchandise exports recorded their lowest level in more than three years, slumping 17.4 percent to $4.899 billion from $5.932 billion a year earlier.

“We have some challenges because of exports . . . Globally, exports have been less robust than what we had expected,” Balisacan said.

The government has set a higher target of 7 percent to 8 percent GDP growth for full-year 2015.

The NEDA chief said attaining even the lower end of such target remains a challenge.
“[It’s a] big challenge to get the 7 percent but we’ll see,” he said.

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