• ANALYSTS’ ESTIMATES

    Q1 GDP growth seen at 6.4-7.2%

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    Analysts tracking the performance of the Philippine economy have issued a wide range of forecasts for growth in the first quarter, from 6.4 percent to 7.2 percent, on the back of strong manufacturing and private consumption, as well as improving exports and government spending.

    The estimates made by the analysts, or economists from seven financial institutions polled by The Manila Times, put the average growth rate at 6.8 percent for the quarter ending March 2017, the same rate of expansion achieved a year earlier.

    That average reflects a pickup from the 6.6 percent rate posted in the fourth quarter of 2016.

    However, their estimated range falls slightly below the government’s target of between 6.5 percent and 7.5 percent for GDP growth for full-year 2017. For the entire 2016, the economy grew 6.9 percent.

    Official first-quarter GDP data is scheduled for release by the Philippine Statistics Authority this Thursday, May 18.

    Most optimistic
    Having the most optimistic view was ANZ Research economist Eugenia Victorino, who said Philippine GDP growth remained robust, rising to 7.2 percent in the first quarter on the back of a strong performance by the industrial sector and private consumers.

    “Private consumption likely maintained its above-trend growth. Likewise corporate capex spending is still keeping up,” she said.

    Analysts from Moody’s Analytics and Metrobank Research estimated first-quarter growth at 6.9 percent.

    Moody’s Analytics said domestic demand continued to be the main driver, with private investment and consumption increasing rapidly.

    “Positive demographic factors and rising incomes are supporting consumption,” it said.

    Net exports should also be a positive, as merchandise exports recovered in recent months and service exports continued to perform well, the research unit of ratings firm Moody’s added.

    Metrobank Research head Marc Bautista took into account some recovery in exports, strong investment spending and still robust household consumption expenditures for his estimates.

    “For full-year 2017, we expect GDP to range between 6.5 percent and 7.5 percent, depending on the roll-out of the government’s massive infrastructure spending this year,” he said. His first-quarter estimate matches that of the government’s full-year target range for 2017.

    ‘Buoyant manufacturing’
    While three of the polled analysts projected growth acceleration in the first quarter of this year and three others estimated a slowdown, IHS Markit expected the rate of growth to just maintain its pace from the corresponding period of last year.

    Rajiv Biswas, Asia-Pacific chief economist at IHS Markit, said the Philippine economy continued to show robust economic expansion in the first quarter of 2017 at 6.8 percent year-on-year.

    “The positive performance is estimated to have been underpinned by continued strong private consumption expenditure and government spending,” he said.

    Biswas noted that manufacturing production measured both in value and volume terms rose strongly in March, continuing to reflect buoyant manufacturing output growth.

    “Near-term indicators continue to signal strong positive growth momentum, with the Nikkei Philippines Manufacturing Purchasing Managers Index produced by IHS Markit at 53.3 in April, indicating robust expansion in the coming months. For calendar year 2017, IHS Markit forecasts that growth will register 6.4 percent year-on-year, “marking the sixth successive year of rapid economic growth,” he said.

    Increased imports
    Land Bank of the Philippines market economist Guian Angelo Dumalagan said the economy likely expanded by 6.7 percent in the first quarter, driven by strong consumption and investment spending, as reflected by the robust performance of the manufacturing sector.

    “Exports also contributed more to growth, although gains were offset an increase in inbound shipments. The rise in imports is not necessarily a negative development, as it points to upbeat domestic demand,” he added.

    Dumalagan also said stronger consumption spending and exports likely pushed growth above the 6.6 percent level in the fourth quarter of 2016, but the normalization in economic activity after last year’s election likely tempered growth below the 6.8 percent reading recorded in first three months of 2016.

    “The depreciation of the peso contributed to growth by boosting exports and increasing the purchasing power of every dollar

    sent home by Filipinos working abroad,” he added.

    Overall, Dumalagan said the Philippine economy might expand by 6.8 percent this year with strong domestic demand, further recovery in exports, and higher government spending likely providing an additional boost toward the end of the year.

    Impact of 2016 election spending fades
    Ateneo de Manila University economic professor Alvin Ang said growth in the three months to March grew 6.6 percent. He did not elaborate.

    The least optimistic estimate came from Deutsche Bank economist Diana del Rosario, who said the Philippine economy expanded by 6.4 percent in the first quarter, just a tad slower than the 6.6 percent growth in the preceding quarter.

    “The pace of domestic demand likely softened during the quarter, as the stimulative impact of last year’s elections dissipated. But the slowdown was likely countered by a strong rebound in exports,” she said.

    For full-year 2017, she said growth may reach 6.2 percent.

    Estimates backed by higher output indicators
    The latest available data showed that industrial output grew faster in volume and value in March, with expansions recorded in the production of fabricated metal, petroleum products and other major sectors.

    The Volume of Production Index (VoPI) rose 11.1 percent in March, faster than 8.2 percent a year earlier. The Value of Production Index (VaPI) grew 12.2 percent from 0.8 percent.

    The National Economic and Development Authority (NEDA) said the increase in production of construction-related manufactures was backed by demand for residential and commercial development and increased spending on public infrastructure.

    Meanwhile, exports in the first quarter of 2017 expanded by 18.3 percent to $15.51 billion from $13.10 billion during the same period last year.

    On the other hand, government spending at end-March reached P615.4 billion, surpassing the year-earlier level of P591.5 billion.

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