Growth in the Philippine economy remained “favorable” in the first quarter of the year, driven by strong private demand and surging remittances amid a low-inflation environment, the central bank said ahead of the official release of first-quarter gross domestic product data (GDP) next week.
The BSP does not publish quarterly forecasts for GDP growth. “Nevertheless, the BSP is of the view that prospects for the domestic economy remain favorable,” BSP Governor Amando Tetangco Jr. said in an email to reporters on Monday.
The government is expected to release the figures for first-quarter 2015 GDP growth in the last week of May.
Financial markets will be comparing the new GDP growth figures with the 6.9 percent increase posted in the preceding quarter or October-December 2014 and the 5.6 percent expansion in the first quarter of 2014.
Tetangco said private demand in the country continued to be strong, aided mainly by sustained remittance inflows and low inflation.
As of end-March, personal remittances were up 5.1 percent at $6.41 billion from $6.1 billion recorded in the same period in 2014.
The cash component of such remittances, as coursed through banks, rebounded in March from a slowdown in the preceding two months and hit its fastest pace of growth in more than five years of 11.3 percent to $2.1 billion.
Meanwhile, headline inflation for January to April averaged 2.3 percent, or within the central bank’s target of between 2 percent and 4 percent this year.
“Planned infrastructure spending and additional government expenses for the upcoming 2016 election should also provide an additional boost to the local economy,” the BSP governor added.
The government has set a P2.606-trillion national budget for this year, with an additional P167.9 billion allocated to the rehabilitation of Yolanda-affected communities. It also aims to increase public infrastructure spending to at least 5 percent of GDP by 2016 from about 3.5 percent in 2014.
Tetangco stressed that capital formation should also contribute to economic growth, with construction and investments in durable equipment expected to remain strong.
He added that the BSP shares the government economic planners’ assumption of 7 percent to 8 percent growth in the economy for 2015 and 2016.
Earlier, the International Monetary Fund (IMF) estimated first-quarter growth in the Philippine economy gained pace from a year earlier, but slackened from the preceding quarter given weaker exports.
The IMF said domestic demand fueled by low oil prices likely pushed GDP up in the first quarter of 2015 from 5.6 percent posted in the corresponding period in 2014.
However, weaker manufacturing output and exports may have pulled down GDP from a growth rate of 6.9 percent in the last quarter of 2014, it said.
Recent estimates by private analysts, meanwhile, showed key macroeconomic indicators point to a still healthy but slower expansion in the economy in the first quarter of 2015, compared with the fourth quarter of last year, thanks to robust domestic demand and higher government spending, particularly on infrastructure projects.
In separate studies, Moody’s Analytics, Bank of the Philippine Islands and Accord Capital Equities Corp. put their estimates of growth in gross domestic product (GDP) for January to March at between 6.4 percent and 7.3 percent, gaining momentum from a 5.6 percent increase a year earlier.