US firm hikes Phl growth forecast

MANILA, Philippines - New York-based think tank GlobalSource Partners raised its full-year Philippine economic growth forecast to 6.1 percent following the better-than-expected second quarter performance.

The latest figure was an upward revision from the 5.8 percent forecast released by the think tank in July, but the same as the 6.1 percent projection announced in May.

 “We think the economy is not yet out of the woods in terms of bearing the costs of port congestion, which will feed into prices and economic activity in the second half of 2014,” analysts Romeo Bernardo and Christine Tang said in a market brief.

 “Although the Planning Secretary continues to see a ‘strong likelihood’ of attaining the government’s 6.5 to 7.5 percent target for the year, at this time we can only concede a return to our start-of-the-year 6.1 percent forecast from 5.8 percent for 2014 due mainly to the better second quarter growth performance,” Bernardo and Tang said.

The economy grew by a slower 6.4 percent in the second quarter from 7.9 percent in the same period last year, but faster than the disappointing 5.6 percent growth rate in the first quarter of the year.

This brought the first-half economic growth to six percent, still below the government target of 6.5 to 7.5 percent expansion for 2014.

Bernardo and Tang noted the lower private consumption growth of 5.3 percent seen in the second quarter compared with the 5.9 percent growth in the first three months of the year.

“We anticipated this given rising prices, especially of food. We are expecting this to slow down further as supply-side pressures continue to keep inflation elevated,” the analysts said.

 “In particular, the two main sources of supply side risks at this time are reduced rice stocks, especially following a failed auction to bring in rice imports by September, and increased production costs due to port congestion that has yet to be satisfactorily resolved,” they said.

At the same time, Bernardo and Tang attributed the 13 percent drop in public construction to “implementation bottlenecks.”