Philippine growth seen topping 6.1% this year

MANILA, Philippines - Philippine economic growth would likely accelerate this year from the strong 6.1 percent expansion in 2014, fueled by poll-related spending in the run-up to the 2016 national elections, the research arm of Metropolitan Bank and Trust Co. said.

 “Research sees 2015 to be a better year especially with spending for the 2016 elections expected to be kick-started in the second half of 2015,” Metrobank Research said in its latest The Economic Weather Report.

“The increase in government spending is seen to cause a rebound in investment spending and will also further boost consumption spending. The industry sector will still be a top performer this year amid the solid expansions in the manufacturing and construction sectors,” the bank added.

Metrobank Research has forecast gross domestic product, a measure of economic output, to grow 6.4 percent this year, below the government’s seven to eight percent target.

 “Risks to the domestic economy however remain amid the persistent port congestion issues, looming power supply crisis, uneven global economy, and impact of financial market volatilities,” Metrobank Research said.

GDP growth surged to 6.9 percent in the last quarter of 2014 after a dismal 5.3-percent pace in the third quarter. This brought full-year economic growth at 6.1 percent, still short of the government’s 6.5 - 7.5 percent goal.

However, Philippine economic growth last year remained the second fastest in Asia, after China’s 7.4 percent expansion. This also marked the third consecutive year the country achieved an above six percent growth.

 “2014 growth can be attributed to the rebound in external trade, robust industry sector, and still solid consumption,” Metrobank Research noted.

The foreseen strong economic growth this year will be matched by a manageable inflation, which Metrobank Research expects to average 2.8 percent.

 “Expect low inflationary pressure this 2015, as stable food prices and soft oil prices remain. The high 2014 base will also dampen pressures to the index,” the bank said.

 “Possible upside risks may come from power costs given shortages in the Luzon grid this summer and a sudden reversal in oil price movements,” Metrobank Research warned.