ECONOMIC growth could return to the 7 percent level in the second half of the year, supported mainly by the economic recovery in the second quarter and the government’s accelerated infrastructure spending, a study said on Tuesday.
First Metro Investments Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said in a joint report that the economy appears to have recovered in the second quarter as more economic indicators—like factory output, exports and government spending—emitted “positive signals” during the period.
In the August issue of “The Market Call,” FMIC and UA&P said it gross domestic product growth in the second quarter may have exceeded 6 percent, and the rebound from the relatively weak 5.7 percent GDP gain in the first quarter will likely extend throughout the rest of the year.
“With clearer signs of a recovery in the second quarter and detailed reconstruction plans for typhoon Yolanda-hit areas ready for implementation, we are quite confident that the economy will accelerate back towards the 7 percent growth path in the second half,” they stated.
FMIC and UA&P noted that gains in industrial output look solid as 16 out of 23 industries were in positive territory on the back of strong 4.5 percent employment growth in the April 2014 government survey.
They also said healthy initial export earnings hint of growth in the first half, thus, a mildly upbeat outlook for the year.
“Stronger global manufacturing activity and the relaxation of the Manila truck ban should help sustain export growth. Some relief should come in the second half, and exports growth should improve in third quarter and second half in general,” they added.
Furthermore, FMIC and UA&P said slightly stronger export growth in the second half is expected as the United States economy has shown firmer signs of a recovery, especially in job creation.
With the European Union gradually getting back on its feet and China seen to continue posting better than 7 percent growth for the second half, both will add to the demand for Philippine export products, they added.
On the other hand, FMIC and UA&P noted that the government has also scaled up its spending as disbursements surged 44 percent in June, much faster than the 6 percent revenue growth for the month.
“Government’s effort of speeding-up spending channeled mainly to ongoing reconstruction and rehabilitation. Despite a temporary slowdown in public spending in the second quarter due to the commotion over the unfavorable Supreme Court ruling on the government’s Disbursement Acceleration Program, we expect it to get back on track in the second half,” they said.