Expectations of strong economic growth continue to firm up, as the Monetary Board (MB) noted that early economic indicators point to another strong GDP expansion in the first three months of this year.
In the highlights of the MB’s latest meeting on Thursday, the seven-man monetary policy-making body of the Bangko Sentral ng Pilipinas (BSP) said several so-called high-frequency demand indicators show solid growth prospects for the first quarter.
“Latest indicators of domestic demand continue to point to firm growth prospects over the policy horizon,” the BSP’s Monetary Board said. Among the indicators the MB cited were the continued increase in sales volume of automobiles and electricity, as well as the production volume in the manufacturing sector.
Latest data from the Chamber of Automotive Manufacturers of the Philippines Inc. and the Truck Manufacturers Association showed a 23-percent increase in vehicle sales in the first quarter of the year, as March alone showed a 33-percent jump in automobile sales.
The Philippine Statistics Authority’s (PSA) monthly integrated survey of selected industries for February this year, meanwhile, showed that the volume of production
index posted a 10.7-percent increase, faster than the 7.1-percent growth recorded in January.
“Strong national government expenditure growth resulting form the initiatives of the Duterte administration to ramp up public spending as evident in the second semester of 2016 is also expected to provide a boost to the economy,” the MB also noted.
Other latest indicators of domestic demand, the MB noted, continue to “broadly point to firm growth prospects over the policy horizon”.
Among these other pointers include the Philippines’s composite Purchasing Mangers Index (PMI), which continued to remain in the expansion threshold as of the latest data.
In particular, regional business media organization Nikkei and international think tank IHS Markit earlier said the Philippines’s PMI accelerated in March to 53.8 from the 53.6 in February.
The PMI is a composite index, calculated as a weighted average of five individual subcomponents. Readings above 50 signal an improvement in business conditions on the previous month, while readings below 50 show deterioration.
The Philippines’s 53.8 PMI is above the Asean average PMI of 50.9 in March. It is also the second- highest PMI for the month in the region, next to Vietnam, with a 54.6 PMI during the period.
The BSP also said the business community—as shown in its quarterly survey of firms nationwide—continued to show “steady and positive” optimism for the economic prospects for the first quarter of 2017 and the next quarter.
Indicators studied by the central bank’s MB back the International Monetary Fund’s (IMF) optimism on the Philippine economy, which the IMF projects to grow 6.8 percent for this year.
For next year, the IMF said it sees the Philippines putting in a 6.9-percent growth.
With regard to prospects in the global economy, the MB said it sees improvement in overall economic activity and inflation.
“The pace of economic activity in the US, euro area and Japan remained steady, while production improved in China and India. The sharp increase in energy prices led to higher inflation in the US and euro area, while the uptick in the prices of food, tobacco and liquor pushed inflation up in China,” the central bank said in the highlights of the monetary- policy meeting.
“Stronger growth, along with stronger inflationary pressures, including higher commodity prices, are seen to affect the future stance of monetary policy in advanced economies,” the BSP added.
This assessment also parallels IMF’s improved projection of the world economy, as it recently upped its forecast from 3.4 percent to 3.5 percent for the year.
In its latest meeting in March, the BSP maintained all policy levers on hold and unchanged. The BSP is set to meet again on May 11 for its third monetary-policy setting for the year.
The MB emphasized that domestic economic activity is projected to stay firm, supported by buoyant household consumption and private investment, increased government spending and ample credit and liquidity.
The PSA, meanwhile, will be releasing the country’s GDP numbers in mid-May.