‘PH economic growth likely slowed in 2015’

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Philippine economic growth likely slowed to below 6 percent in 2015, analysts polled by The Manila Times said, even as the October-December pace could have gone either way given a slew of positive and negative factors.

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Gross domestic product (GDP) growth could have picked up to as much as 6.4 percent in the last three months of 2015 or eased to 5.7 percent, they said, bringing the full-year expansion to a range of 5.7 percent to 5.9 percent.

A strong services sector, robust consumption, improved government spending and infrastructure investments were cited as the likely drivers of a fourth-quarter acceleration. A continued decline in exports and a contraction in agriculture output, on the other hand, could have dragged down GDP growth.

The economy grew by 6.1 percent in 2014. The government, which has a 7 percent to 8 percent target, expects a 2015 result of around 6 percent. The Philippine Statistics Authority (PSA), which on Wednesday raised the third quarter result to 6.1 percent from 6 percent, will release October-December and full-year figures today.

Growth was a below target 5.6 percent as of end-September, with government underspending said to be a primary factor. The 2014 fourth quarter GDP figure, meanwhile, is 6.9 percent.

Analysts’ estimates

Dr. Victor Abola of the University of Asia and the Pacific was the most optimistic among the analysts polled, estimating a fourth-quarter GDP result of 6.4 percent and full-year growth of 5.9 percent.

Diana del Rosario, economist at Deutsche Bank Research, offered a slightly lower 6.3 percent for the quarter, which would bring 2015 growth to 5.8 percent.

Bank of the Philippine Islands associate economist Nicholas Antonio Mapa, meanwhile, estimated a 6.2-percent expansion for the three-month period, bringing 2015 full-year GDP to below 5.8 percent.

“Services sector to be the main driver as always, agriculture to struggle on El Niño and industry to post marginal gains on slower manufacturing as evidenced by weak exports numbers,” Mapa said.

Pauline Revillas, analyst at Metrobank Research, forecast fourth-quarter GDP to come in at 5.9 percent, capping 2015 growth at 5.7 percent.

“The poor external trade performance had been a drag to overall GDP growth in the first three quarters of 2015 and we can expect it to remain so in the fourth quarter amid the sustained economic slowdown in one of the Philippines’ top trading partners, China, and the strong US dollar,” she said.

ANZ Research Asean and Pacific economist Eugenia Victorino expects fourth-quarter GDP growth to have eased to 5.9 percent due to base effects. Nevertheless, she said consumption growth was above trend in 2015, offsetting the widening trade deficit.

“Although government spending likely missed the government’s target, we expect an improvement in fourth [quarter]. Credit growth remained robust. In sum, we expect 2015 full-year growth to have posted 5.7 percent year-on-year,” she said.

Joseph Incalcaterra, HSBC economist for Asia Pacific, forecast fourth-quarter growth of 5.7 percent and a full-year reading of 5.6 percent, supported by private consumption, government spending, and infrastructure.

“From a supply-side perspective, services activity likely accelerated while industrial growth is moderating and agriculture output possibly contracted on sequential terms due to adverse weather,” he said.

Earlier this month, the government reported that agriculture output contracted by 0.96 percent in the October-December period, narrowing the sector’s full-year growth to just 0.11 percent, given the impact of a severe dry spell. In 2014, agriculture grew by 1.39 percent.

Merchandise exports, meanwhile, dropped for an eighth consecutive month in November last year, contracting by 1.1 percent as the global economy remained weak. Year to date, exports were down 5.8 percent.

Optimism moving forward
Also yesterday, BDO chief market strategist Jonathan Ravelas said full-year growth could have hit 5.8 percent, with the expansion likely to accelerate to 6 percent to 6.5 percent this year.

The optimistic outlook, he said, is based on “resilience in business process outsourcing and overseas Filipino workers [OFW] receipts, strong domestic consumption, and big fiscal and public debt gains.”

Both positive and negative factors have been taken into account, Ravelas said, including a gradual hike in US interest rates, “geopolitical noise” and slow infrastructure spending.

The peso and the stock market, hammered since the start of the year by global volatility, is expected to recover. The currency was forecast to end 2016 at P47.06 to the dollar, while the Philippine Stock Exchange index was projected to hit 8,000, to be helped by a “honeymoon period” for whoever is elected the country’s president in May.

UA&P economist Bernardo Villegas, meanwhile, said strong domestic consumption would keep growth in a range of 6 percent to 7 percent even if an “incompetent” president is elected.

“The Philippine growth of 6 percent to 7 percent over the last four years will be sustained whoever will be the president. The engine of growth has nothing to do with the presidential leadership,” Villegas said.

Election spending in the first quarter will provide support, as will remittances that are expected to hit $26 million this year and outsourcing receipts seen at $22 billion.

“It doesn’t matter who will be the elected president, the economy can grow 6 percent to 7 percent. But if we get the right president, then the growth rate could be one of the highest in the world at 8 percent to 10 percent,” Villegas claimed.

To qualify, a “right president” should focus on implementing public-private partnership projects, increasing foreign direct investments and have the political will to remove certain investment restrictions in the 1987 Constitution.

WITH A REPORT FROM KRISTYN NIKA M. LAZO

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