THE Philippines could have topped the ceiling of the government’s target for this year, if net exports were taken out of the equation—a contrast to actual economic expansion in the first three quarters of the year, which barely brushes the bottom end of the target this year.
In his latest commentary on the Philippines, Singapore-based DBS Bank economist Gundy Cahyadi said his estimates project a stellar GDP growth for the country at 8 percent—if the drag in net exports was removed from the country.
Earlier this month the Philippine Statistics Authority (PSA) reported that the country’s export sales totaled $4.405 billion in September this year, posting a 24.7-percent decline from the $5.846 billion in September last year.
The decline was seen in eight out of 10 top major commodities for the month. These include chemicals, at -85.5 percent; other mineral products, -72.8 percent; other manufactures, -66.1 percent; metal components, -55.8 percent; articles of apparel and clothing accessories, -45.5 percent; coconut oil, -38.4 percent; ignition wiring set and other wiring sets used in vehicles, aircraft and ships, -2.7 percent; and electronic products, -2.1 percent.
Economists have earlier attributed the slump in the country’s export sales to the weak global demand, particularly in China and the United States.
The weakness in exports—which was also seen across other emerging markets in the world—is also being blamed for the weaker GDP growth of the country this year.
Just this week the PSA reported that GDP grew year-on-year by 6 percent in the third quarter of 2015. This is higher than the growth rates of 5.8 percent in the second quarter of 2015 and the 5.5 percent in the third quarter of 2014.
Despite the acceleration of growth, it is still lower than the government’s target of 7 percent to 8 percent on average for the year.
The DBS Bank economist also said domestic demand—the main driver of the Philippines’s growth story—remains robust and will do so up until 2016, where they see growth hitting an average of 6.1 percent. This is still below the government’s target for the year, at 7 percent to 8 percent.
Cahyadi also said they expect inflation to rise as the year ends, supporting the central bank’s stance to keep its current policy intact.
“There is yet to be any compelling reason for the BSP to trim its interest rates,” the economist said.