THE Philippines’ gross domestic product (GDP) likely grew by more than 7 percent in the first quarter of 2016, driven by higher electricity rates, on expansion in manufacturing output and a jump in capital goods imports, a private think tank report said.
“The Philippine economy should have easily expanded by more than 7 percent in the first quarter of 2016, despite a possible 5 percent decline in agriculture due to the El Niño drought,” investment bank First Metro Investments Corp., (FMIC) and the University of Asia and the Pacific (UA&P) said in their latest joint issue of The Market Call.
The forecast provided by FMIC and UA&P, if correct, would be the highest quarterly GDP growth since the 7.7 percent expansion of the economy in the first quarter of 2013, and would be significantly higher than the 5 percent growth a year earlier as well as the 6.3 percent expansion in the last quarter of 2015.
The government has set a GDP target range of 6.8 percent to 7.8 percent this year, higher than the 5.8 percent full-year growth in 2015.
The report said three strong indicators support its forecast: Meralco electricity sales growth in January and February hit double-digits at 12.3 percent and 11.6 percent respectively; a surge of 34.3 percent in manufacturing output in January; and a whopping 80.4 percent jump in capital goods imports–which accounted for 38 percent of total imports–in the same month.
“This optimistic outlook not only hinges on the stellar performance in January but also on our expectations for the other sectors,” it added.
The publication pointed out that robust election spending by both the government and individual candidates for public office should continue up to the actual elections in May.
This should boost employment, consumer and investment spending, it said.
The think tank said the poor performance of exports represented the only important bad news.
“External demand could possibly pull down the quarter’s performance, but that remains unlikely as domestic demand has dominated the Philippine growth story in recent years,” it said.
Dragged by the slowdown in the country’s major trading partners, exports slipped by 3.9 percent in January 2016, marking the tenth consecutive month of negative growth since April 2015.