Banking giant Standard Chartered Bank has trimmed its 2017 growth forecast for the Philippines to 6.5 percent from 6.8 percent on account of a first-quarter slowdown.
“Earlier in the year we were looking at 6.8 percent. So I think its a bit of a mark to market issue because the first quarter is actually came in slower and simply by looking at our quarterly forecast, we expect growth lower at 6.5 percent this year,” Standard Chartered regional head of research Edward Lee said in a briefing in Makati City on Tuesday.
The revised 2017 forecast – at the lower end of the government’s 6.5 to 7.5 percent target – represents a slowdown from last year’s actual growth of 6.9 percent.
The Philippine economy grew by 6.4 percent in the first quarter of the year, down from 6.9 percent a year earlier and the 6.6 percent recorded in the last three months of 2016.
Still, Lee said the economy was poised to pick up in the second half of 2017 relative to the first half.
Citing the bank’s “Swans, Bulls and Bears” report, he said infrastructure investment was likely to recover from the first-quarter trough as investments in Metro Manila come online.
“Project delivery in line with the planned schedule would present upside risks to our growth forecast,” Lee said.
The Duterte government aims to spend P847 billion this year on infrastructure, including small-, medium- and large-scale ventures, to meet a target infrastructure spending-to-gross domestic product (GDP) ratio of 5.3 percent.
Lee also said household spending was likely to remain strong but growth could slow from the 6 percent pace of 2016.
“We also expect services growth to remain solid. Public-sector construction momentum is likely to pick up in second half, while robust domestic demand is keeping manufacturing growth steady,” he said.
While remittances are expected to continue supporting a current account surplus, Lee said growth was also expected to slow.
“Growth in overseas remittances is slowing as the number of overseas workers stabilises and as sluggish global growth reduces opportunities. We expect remittances to rise 4 percent to 6 percent in 2017,” he said.
Strong capital goods imports, meanwhile, are expected to limit the current account surplus to just 0.2 percent of GDP.
The current account reverted to a deficit of $318 million in the first quarter, equivalent to 0.4 percent of GDP and a turnaround from the $730 million surplus last year.
The Bangko Sentral ng Pilipinas forecasts a $600-million current account deficit for 2017, reflecting for the most part the continuation of a widening trade deficit.
Standard Chartered’s move is in line with other downward revisions.
The World Bank has revised its 2017 forecast for the Philippine economy to 6.8 percent from 6.9 percent on account of the slowdown in the first quarter.
Credit Suisse reduced its growth forecast to 6 percent from 6.4 percent, saying it expected private consumption to moderate.
ANZ Research kept its forecast at 6.9 percent, saying overall growth was strong and balanced.
Capital Economics noted the economy was likely to continue growing at a solid 6.5 percent, while DBS and IHS Markit maintained their forecasts at 6.4 percent.
First Metro Investment Corp. and the University of Asia and the Pacific also maintained their GDP growth forecast, at 7 percent this year.
The Asian Development Bank , meanwhile, raised its forecast to 6.5 percent for 2017 and 6.7 percent for 2018.