FIRST Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) maintained their 6-to 6.5-percent growth forecast for the Philippine economy this year as they expect state spending, lower inflation rate and robust remittances to drive expansion for the rest of the year.
“We still maintain our full-year 6-percent to 6.5-percent GDP (gross domestic product) growth, albeit likely to be in the lower part of that range,” FMIC and the UA&P said in the latest issue of “The Market Call” released on Friday.
The latest projection falls within the government’s downwardly revised 6- to 7-percent target range.
The government earlier reported that the country’s GDP expansion slowed to 5.5 percent in the second quarter, bringing growth in the first half of the year to 5.5 percent.
“We believe that [the] Philippines’ growth will improve significantly in the last two quarters of the year as we expect national government spending to ramp up in [the] second half of 2019,” FMIC and UA&P said.
They expect “huge spending” on infrastructure and capital outlays during the period. particularly for projects implemented by the Department of Public Works and Highways.
“Besides, NG (national government) still enjoys more than enough fiscal space remaining until the end of the year,” FMIC and UA&P said.
Acting Budget Secretary Wendel Avisado announced earlier that the Public Works department had programmed some P542.6 billion in disbursements in the second half of the year, equivalent to 71.8 percent of its P755.6-billion spending commitment.
“Softer inflation and higher peso equivalent of the remittances should also drive further economic activity,” FMIC and UA&P said.
They expect inflation to ease below 2 percent by August and even less than 1.5 percent by October after slowing to 2.4 percent in July.
FMIC and UA&P also see remittances from overseas Filipino workers to remain robust, which, they said, would accelerate consumer spending in the second half.
Personal remittances reached $16.25 billion in the January-to-June period, up 2.9 percent from $15.78 billion a year earlier.