BSP sees faster GDP growth in H2

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) sees the country’s economy picking up in the second half of the year on the back of robust private consumption as well as higher government spending and investments.

BSP Deputy Governor Diwa Guinigundo told reporters that the driver of growth would include higher consumption expenditure arising from robust remittances from overseas Filipino workers (OFWs) and the promising business process outsourcing (BPO) sector as well as improving domestic capital formation.

“As usual the driver would be the two pillars – consumption expenditure and domestic capital formation,” Guinigundo said.

He pointed out that private consumption would depend on the amount of money sent home by Filipinos abroad to their loved ones in the Philippines as well as the employment generated by the BPO sector.

The BSP sees OFW remittances rising by seven percent to $20.1 billion this year and by five percent to $21.1 billion next year.

Furthermore, he cited the role of domestic capital formation that has bounced back in the last few quarters easing the impact of the country’s slackening merchandise exports.

According to him, domestic capital formation would further improve once the PPP projects covering much needed infrastructure and development projects are put on stream.

 “If the PPP scheme is put on stream, domestic capital formation will improve and once investments come in people will also be expecting that there will be business in some parts that could already generate economic activities,” Guinigundo added.

 He also cited that imports grew by more than 20 percent in April as the volume and value of imported mineral fuels including pertroleum products improved significantly.

 “Both volume and prices will drive the increase in the value of mineral fuels. This means that the economy is really moving,” he explained.

 The country’s GDP growth slackened to 4.9 percent in the first quarter of the year from the revised 8.4 percent in the same quarter last year. The Philippines posted its strongest economic growth in 34 years after its GDP expanded by 7.6 percent last year from 1.1 percent in 2009.

 Guinigundo said the Philippines is coming from a high base growth last year as the GDP was boosted by election related spending due to the presidential, national, and local elections last year.

 The Cabinet-level Development Budget Coordination Committee (DBCC) sees the country’s GDP expanding between 7 percent and 8 percent this year.