The economy probably expanded in the third quarter within the government’s 6 to 7 percent goal, 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.
GDP probably rose 6.5 percent in July to September from a year ago, helped by higher government spending, particularly on infrastructure, which created more jobs.
“Employment numbers in July and continued high growth in durable goods imports provide much confidence for a strong performance in third quarter,” they said.
The report said the booming economy created 1.8 million net new jobs as of July 2016, representing a 154 percent increase from the year-ago, and hugely surpassed the 1 million job target of the past two administrations.
“This augurs well for continuing robust consumption on growth in second half and together with a 23 percent increase in capital goods imports, and foreign direct investments hitting $4.7 billion year-to-date in July, would indicate that the economy has stayed on course for another solid performance in third quarter,” it said.
But compared to the second quarter, when GDP rose 7 percent year-on-year, growth likely slowed down in the third quarter, pulled down by a slight decline in OFW remittances, particularly in July, and sagging exports.
The report though is upbeat on infrastructure build up, which could fuel growth in the coming years. It cited the recent move of the DPWH to award the 8-kilometer North Luzon Expressway-South Luzon Expressway connector road to Metro Pacific Tollways Development Corporation and its subsidiary Manila North Tollways Corporation.
On the downside, FMIC and UA&P said exports would continue to be challenged, although there is a likelihood that they will finally emerge in the positive territory by fourth quarter.
“OFW remittance appear to be slowing down, as Middle East employers are opting for younger, less experienced workers, but these will stay in the green for the rest of the year,” the report said.