FMIC, UA&P OUTLOOK:

Investment, consumption surge signals strong Q2

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A Surge in investments, coupled with robust consumption and other early output indicators suggest that the strong 6.9 percent GDP growth in the first quarter of 2016 likely continued in the second quarter, a private think tank report said.

“Another whopping 56.7 percent surge in capital goods imports in April pointed to the new economic driver for the economy—investments,” investment bank First Metro
Investments Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said in a joint issue of The Market Call.

The report said heavy infrastructure spending in April—shown by a 26 percent increase in national government expenditures, excluding interest payments—provided the second leg for the capital formation run in the country.

Added to the first engine—consumer spending—the spending buildup has provided consistently solid impetus to the economy, it said.


“All told, early economic indicators, such as industrial output and electricity sales, suggest the Philippine economy continued its upward momentum into Q2,” it added.

The economy grew 6.9 percent in the first quarter of 2016, well within the government’s revised official 6-7 percent target range for GDP growth this year.

The think tank had forecast first-quarter growth at “more than 7 percent” in April, shortly before official data was released.

At the beginning of the year, FMIC and UA&P offered an “optimistic but guarded” outlook of 6 percent to 6.5 percent growth for the economy this year. Earlier this month, FMIC joined a host of other banks and analysts in revising initial projections for 2016 upward, forecasting 6.5 percent 7 percent growth for the year.

Higher industrial output

FMIC and UA&P said that early indicators, such as manufacturing output and Manila Electric Co. (Meralco) electricity sales, also point to strong gross GDP growth continuing in the second quarter.

“Industrial output rose by double-digits in April, while Meralco electricity sales growth kept its five-month old double-digit pace until May,” their joint report said.

They noted that manufacturing sector output, as measured by the Volume of Production Index, expanded by 10.5 percent in April, registering a double-digit gain for the third month out of four.

Meanwhile, Meralco sales in May recorded a 10.8 percent jump, marking the fifth consecutive month of above-10 percent growth in energy sales for the nation’s largest electricity distributor.

Besides the strong output indicators, FMIC and UA&P also said the primary and secondary school opening in June usually provides an additional kicker to spending.

“The Philippine economy continues to be sufficiently robust as to decouple, at least for this year, from the weakness of the global economy,” it concluded.

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1 Comment

  1. Baka pwede tingnan ng president na matulungan ang stranded OFW sa KSA at iba pang bansa na maibalik sa Pilipinas, at maging katulong sa mga projects as workers/trabahadors/overseers sa maraming malalaking infrasture projects ng gobyerno.

    Huwag lang umasa DPWH at government agencies na pugad din ng corruption at incompetence.

    Example project ng DPWH at local LGU’s – pag gawa/repair lang ng kalsada – bubutasan ang mga kalsada, kunan ng picture at sisingil ng progress billing ang kasabwat ng contractor, tapos wala na. Ang resulta trapik, aksidente, ubos ang pera ng governo, etc. Isa pa ang rigged bidding sa lahat ng ahensya ng gobyerno. Ang nananalo hindi talaga competent, walang kakayahan, magnanakaw lang.

    Honesty, competence, realistic goals ang kailangan siguro -iyan ang medyo malayo sa mayayabang ng tauhan sa governo, mula sa executive- hanggang sa judiciary,
    (based on observable results).

    Third party dapat or totoong competent at sanay sa gawa ang dapat humawak, – para naman hindi masayang ang gagastusin sa mga project na pinaplano ng gobyerno, at least hanggang matoto ang government workers kung ano ang tunay na paggawa.