GDP growth seen picking up in H2

MANILA, Philippines - Metrobank Group’s First Metro Investments Corp. (FMIC) and University of Asia and the Pacific (UA&P) expect the country’s economic growth picking up to seven percent in the second half of the year on the back of higher spending.

In a report, FMIC and UA&P said they expect the country’s gross domestic product (GDP) to expand by seven percent in the second semester.

The Philippine Statistics Authority (PSA) reported last month the country’s GDP growth slowed down to 5.3 percent in the first half from 6.4 percent in the same period last year due to weak global demand and lack of government spending.

The country’s GDP expansion accelerated to 5.6 percent in the second quarter compared to the revised five percent in the first quarter on the back of improved public spending.

FMIC and UA&P cited the robust outlook for the second half to higher government spending and increased consumption in preparation for the May 2016 Presidential and national elections.

“The acceleration in government spending provides clear hope the economy would pick up in the second half, especially as candidates for the May 2016 elections open their war chests. We do expect second half growth to recover to seven percent and so end the year slightly above six percent,” the report said.

Economic managers penned a GDP growth of between seven and eight percent this year from 6.1 percent last year.

However, Socioeconomic Planning Secretary Arsenio Balisacan earlier admitted that the country’s GDP growth would hit six percent to 6.5 percent this year.

FMIC and UA&P see inflation averaging below one percent in the third quarter before picking up in the fourth quarter.

Inflation eased to a record low 0.6 percent in August from 0.8 percent in July bringing average inflation at 1.9 percent in the first eight months of the year – slightly lower than the two percent to four percent target range set by the Bangko Sentral ng Pilipinas (BSP).

“Inflation is likely to continue its downward trek as food and especially oil prices remain soft. This should provide an added impulse to more consumer spending in the second quarter,” the report said.

Despite the falling inflation rates due to lower rice and food prices, and continuing weakness of crude oil prices, Market Call said domestic demand has not picked up pace in the second quarter of the year.

It added the El Niño may have dried up farmers’ incomes, while firms benefiting from lower costs due to falling input prices have likely passed on little to consumers.

FMIC and UA&P said exports growth should move back to positive territory in

The second half as the US economy continues to make many small steps forward while the euro zone has shown surprising gains in the second quarter.

 The BSP, according to FMIC and UA&P, is expected to tweak interest rates toward the end of the year.