Moody’s unit forecasts Philippine Q3 GDP growth at 5.8%

MANILA, Philippines - A unit of Moody’s Corp. sees the country’s economic growth accelerating on the back of improved government spending but still falling below six percent in the third quarter.

In a report, Moody’s Analytics said gross domestic product (GDP) growth likely settled at 5.8 percent for the third quarter as higher government spending cushioned the impact of sluggish exports.

“Higher government spending was likely the main driver and provided a further boost to investment over the quarter. The government stepped up stimulus after weakness earlier in the year threatened the Philippines record of impressive GDP growth in recent years,” Moody’s Analytics said.

The country’s GDP growth slowed down to 5.3 percent in the first half from 6.2 percent in the same period last year due to weak global demand and lack of government spending.

The expansion slightly accelerated to 5.6 percent in the second quarter from the revised five percent in the first quarter as the government stepped up spending.

Economic managers have penned a GDP growth of between seven and eight percent this year.

Socioeconomic Planning Secretary Arsenio Balisacan earlier admitted that the country’s GDP expansion could settle between six and 6.5 percent this year from 6.1 percent last year.

Data from the Philippine Statistics Authority (PSA) showed the country’s total exports plummeted 24.7 percent to $4.4 billion in September from $5.85 billion in the same month last year. This was the steepest fall since the country recorded a 27 percent plunge in export earnings in September 2011.

For the first nine months, the country’s merchandise shipments contracted 6.9 percent to $43.75 billion from last year’s $46.97 billion.

 “Exports remained a weak point on weakened global demand, especially from China, an important trading partner of the Philippines,” Moody’s Analytics said.

Moody’s Investors Service, another unit of Moody’s Corp, earlier slashed the economic growth projection for the Philippines for this year and next year amid the subdued global growth exacerbated by weaker demand in China.

It scaled down the country’s GDP growth forecast to 5.7 percent instead of 6.7 percent this year and to six percent instead of 6.5 percent next year.