Moody’s Analytics raises Phl growth forecast to 5.8%

MANILA, Philippines - Moody’s Analytics raised yesterday its full-year economic growth forecast for the Philippines to 5.8 percent.

The figure is an upgrade from an earlier growth projection of 5.4 percent but still below the government’s target of a 6.5-to 7.5-percent growth this year.

Glenn Levine, senior economist at Moody’s Analytics, said that while the country’s potential growth is at 6.5 percent, he does not see the robust public spending growing as much this year than it did in 2013.

“The government was a big driver of the economy in 2013. I’m not sure that will continue at the same pace last year. Electoral cycle was important,” Levine said.

“Last year, (government spending) growth was astronomical... We would not expect that continue at that pace indefinitely,” he said.

The Philippine economy grew 7.2 percent last year, surpassing government’s six- to seven-percent target.

Levine said a slow start this year is seen across Asia-Pacific countries on weak global demand. This is evident in monthly trade data from South Korea, Taiwan, and China, all of which indicated gross domestic product growth in the first quarter may be weaker than the last three months in 2013.

“A harsh winter in the US explains some but not all of the weakness. China’s slowdown, for example, has been driven more by domestic tightening through 2013,” Levine said.

“The latest round of government brake-tapping is working its way through China’s economy. Exports, fixed asset investment, retail sales, and industrial production all slowed in the first two months of 2014,” he said.

Levine said economic growth for countries in Asia is seen below potential, although Moody’s Analytics expect GDP growth to pick up pace in the third quarter of the year.