• Q3 GDP likely grew 6.0-6.9% – analysts


    Economic growth likely accelerated in the third quarter of 2016 compared with a year earlier due to more robust domestic demand, but slowed from the previous quarter as the impact of the May election-related spending faded, analysts polled by The Manila Times said.

    The analysts estimated that the economy, as measured by gross domestic product (GDP), grew between 6 percent and 6.9 percent in the July-September quarter, gaining pace from 5.9 percent a year earlier.

    However, growth slowed from the second quarter of the year, when it expanded by 7 percent, they said.

    Official third-quarter GDP data is scheduled for release by the Philippine Statistics Authority this Thursday.

    The government has set a GDP growth target for full-year 2016 in the 6 percent to 7 percent range, compared with the actual 5.8 percent recorded for the whole of 2015.

    Analysts from Moody’s Analytics, ANZ Research and University of Asia and the Pacific (UA&P) were the most optimistic, estimating third-quarter growth at 6.9 percent.

    Moody’s Analytics economist Jack Chambers sees private domestic consumption, investment and government spending all expanding rapidly, and continuing to serve as the main drivers of growth.

    But he added: “Exports likely slowed in the quarter. This is partly a result of subdued global demand. In addition, nickel exports will be dented by the temporary closure of several mines due to compliance issues.”

    ANZ Research economist Eugenia Victorino said the robust expansion in industrial production amid persistent contraction in exports suggests that domestic demand provided an offset to the external weakness. However, she also noted some slowdown in government spending, “leading to a sequential easing to 1.5 percent quarter-on-quarter from 2.3 percent in the second quarter.”

    DBS economist Gundy Cahyadi estimated the expansion in the economy at 6.8 percent during the quarter, with domestic demand staying strong.

    “Imports of capital goods might have moderated, but still chalking in 22.7 percent growth in the third quarter of 2016. Meanwhile, imports of consumer goods stayed robust at 54.9 percent in the period, suggesting that private consumption growth might have remained close to 7 percent in the third quarter,” he explained.

    UA&P economist Victor Abola said growth drivers for the three-month period were strong manufacturing and construction.

    Standard Chartered Bank economist Chidu Narayanan said growth in the quarter likely remained strong at 6.75 percent year-on-year, driven by still-robust domestic demand and continued expansion in the services sector.

    “We expect growth to have declined mildly in the third quarter [from the second quarter]on the fading of the boost from election spending and the high-base effect from the third quarter of 2015,” the StanChart economist explained.

    Narayanan, however, added that healthy household spending and infrastructure expenditure should have supported growth.

    Bank of the Philippine Islands (BPI) associate economist said the economy in the third quarter possibly posted a 6.7 percent increase, with the major drivers being household final consumption and the turn in the investment cycle.

    “Government spending has moved in to complement the traditional growth drivers, with no letup from the expenditure binge seen in the tail end of the Aquino administration,” he said.

    Chief economist Rajiv Biswas of IHS Markit said the Philippines is estimated to be one of the fastest growing emerging markets worldwide in 2016, with the third-quarter GDP expected to be underpinned by strong domestic demand.

    “Private consumption is estimated to have remained strong in the third quarter, helped by sustained worker remittance inflows, while government infrastructure spending rose sharply in the third quarter compared to a year ago as President [Rodrigo] Duterte’s administration has prioritized infrastructure development,” he said.

    With this, Biswas said GDP growth rate in July to September is estimated to be about 6.6 percent with the continued contraction in exports during the period acting as a drag on the overall strong growth momentum of the domestic economy.

    Japanese investment bank Nomura projected a 6.5 percent third-quarter rise, noting that industrial output growth accelerated in July-August from the second quarter, and government spending held up, even after the elections.

    Deutsch Bank economist Diana del Rosario also said the economy likely grew 6.5 percent in the three months to September.

    “Consumer and business sentiment remained buoyant in the third quarter, which would suggest that private consumption and fixed capital formation barely slowed after the elections,” she said.

    ING Bank Manila senior economist Joey Cuyegkeng gave the lowest estimate, expecting the figures for the third-quarter GDP to show growth of between 6 percent and 6.5 percent.


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