Rising imports could lift H1 GDP – DBS

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THE Philippines’ gross domestic product (GDP) could have risen at a faster rate this May and June than previously estimated and reached 7 percent for the first half of the year, according to the Singapore-based DBS.

The bank had projected GDP to grow by 5.8 percent in the second quarter of 2016, same rate as in the corresponding period of 2015 or lower than the 6.4 percent achieved in the second quarter of 2014.

However, the 39.3 percent year-on-year rise in imports in May—the fastest in 22 years—totaling $6.736 billion in value, DBS said, indicates a much robust surge for GDP.

The bank said that if this surge in imports growth were to remain robust again in June, a 7-percent GDP growth in the first half of 2016 “may not be out of reach after all.”


The Philippine Statistics Authority is scheduled to announce the second-quarter and first-half GDP data on August 18.

The banks also noted that frontloading of investments is likely to have continued in the second quarter of 2016.

On a year-on-year basis, it highlighted that imports of capital goods doubled in May, suggesting that investment growth might have been closer to 20 percent yet again in the second quarter, after the 25.6 percent recorded in first quarter.

“Whether or not this robust growth in imports will be sustained remains to be seen. The most likely scenario is still to see imports normalizing in the second half of 2016,” it added.

With this, DBS said full-year import growth might be a high single-digit but not anywhere close to the 14 percent seen last year.

Besides the surge in imports, DBS noted that there are upside risks to its full-year GDP growth forecast of 6.3 percent this year, which is within the government’s revised 6-7 percent target.

“This is especially true, given the new administration is set to accelerate fiscal spending ahead. It is important, however, to monitor private sector sentiment under the new government,” it said.

DBS’s view is in line with an earlier statement from the National Economic and Development Authority (NEDA) that the increase in imports is a clear signal of the domestic economic conditions remaining robust and the country focusing on infrastructure development.

“With its current upward trend, we expect investments and consumption to drive growth for the rest of the year,” said the Socioeconomic Planning Secretary Ernesto Pernia.

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