MANILA, Philippines – Ayala-led Bank of the Philippine Islands (BPI) believes the country’s economic growth accelerated above six percent in the third quarter on the back of robust domestic demand and higher government spending.
In the latest Global Markets economic commentary and outlook, BPI lead economist Emilio Neri Jr. said the country likely grew 6.3 percent in the third quarter.
After struggling to disburse funds, Neri pointed out the government appeared to have regained its bearings and has shown renewed resolve to complement the rapid private sector expansion.
“Thus, we can expect third quarter GDP to post a 6.3 percent print on sustained consumer spending, investments and a renewed push from the government side,” Neri said.
The country’s GDP growth slipped to 5.3 percent in the first half from 6.4 percent in the same period last year due to weak government spending.
Neri explained the Philippines would distinguish itself from the rest of Southeast Asia as it looks to affirm its “cut above the rest” story.
He added the Philippines is looking at distancing itself from slowing neighbors like Indonesia and Malaysia.
Likewise, the country is looking at regaining recent form as national government spending ramps up under the Aquino administration.
According to him, the presidential and national elections in May next year would help solidify the growth momentum of the Philippines on its way to regain its title as the fastest growing economic among member countries of the Association of Southeast Asian Nations (Asean) in the coming quarters.
Vietnam posted the fastest GDP growth of 6.8 percent in the third quarter of the year while both Myanmar and Indonesia booked a 4.7 percent growth. The GDP expansion of Thailand is expected at 2.6 percent for the third quarter.
Neri said consumption and investments remained robust in the third quarter due to higher import numbers for both durable goods and other consumer goods.
He added the low interest rate environment helped boost car sales, while the Monthly Integrated Survey of Selected Industries showed a pick up in manufacturing activities.
On the other hand, Neri said government spending grew more than 20 percent in the third quarter as the bureaucracy has finally learned to spend given the very stringent budgetary safety measures in place to safeguard against corruption.
BPI noted stumbling exports despite the rebounding electronics shipments amid weak global demand as well as impact of the prolonged and severe El Niño as well as typhoons on agriculture would drag the country’s economic expansion.
For the entire year, Neri said the Philippines is expected to book a GDP growth of six percent, slightly lower than last year’s 6.1 percent before picking up to 6.7 percent primarily due to the presidential and national elections in May.
“Nonetheless, we are not counting out the possibility of the Philippines posting a six percent full-year GDP growth print given the potential stronger contribution of the second half to the overall growth number as the 2016 presidential elections come closer,” he said.