The country’s local output or GDP growth in the first quarter likely reached 7 percent on strong domestic consumption and hike in exports, according to the latest report from a local think tank.
In its latest Market Call, First Metro Investment Corp.-University of Asia and the Pacific (FMIC-UA&P) Capital Markets Research said GDP growth may have settled at a range of 6.5 percent to 7 percent in the January-to-March period.
“We expect the economy to expand by 6.5 percent to 7 percent in Q1 [first quarter], with exports providing the additional booster to robust domestic demand,” the report read. “Supporting [domestic demand] would be strong consumer spending, as OFW [overseas Filipino workers] remittances continued to increase [especially in peso terms] and manufacturing-sector vitality remained intact,” it added.
The Philippine Statistics Authority will release the official GDP data next month.
Since the start of 2017, the country’s export growth has been in double digit at a 40-month high of 24 percent in January and 11 percent in February. Export earnings reached $4.782 billion in February, up from $4.31 billion recorded a year ago.
The hike in the country’s exports was supported by the expansion in factory output, which grew by 10.7 percent year-on- year in February and 9.3 percent in January. “Exports growth in January suggests improving global demand, and we believe that this trend will continue in the coming months, which should add vigor to the economy,” the report read. Further, the government’s massive infrastructure-spending plans may have stimulated GDP growth in the first quarter.
The think tank said big-ticket projects, such as the Calax Expressway, the Metro Rail Transit (MRT) 7 and the Cebu International Airport expansion will boost GDP.
Also, the acceleration of inflation is seen to have a “minimal” impact on the country’s growth not only in the first quarter but also the entire first semester.
FMIC-UA&P Capital Markets Research said inflation could “hover around the median range” of 3 percent to around 3.5 percent in the January-to-June period.
“Upward pressures”, such as higher food prices due to rains and floods experienced in key production areas and oil prices, are not expected to have much impact on inflation in the first half.
“The Monetary Board will likely keep policy rates unchanged in the first semester. It may, however, raise it soon after the Fed decides to hike its policy rates for the second time in 2017,” the report read.
Based on its Asian Development Outlook report, the Asian Development Bank said Philippine GDP could grow by 6.4 percent this year and 6.6 percent in 2018.
The World Bank had a more sanguine outlook as it projected that the country’s GDP growth would hit 6.9 percent in 2017 and 2018, and 6.8 percent in 2019.