ANZ, StanChart see faster Philippines Q1 growth

MANILA, Philippines — ANZ Research and Standard Chartered Bank said the economic expansion of the Philippines picked up pace in the first quarter on the back of robust investments and higher government spending.

In its Asia Macro strategy weekly report, ANZ said the country’s gross domestic product (GDP) grew by 6.8 percent in the first quarter, faster than the revised 6.5 percent in the fourth quarter of last year.

“At the component level, investment activity is likely to have gained momentum, as indicated by the sharp increase in real capital goods imports. Higher government consumption is also likely to have boosted growth,” it said.

ANZ said the decline in motor vehicle sales suggests private consumption may have eased slightly.

The government, through Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the first package of the comprehensive tax reform program, slapped higher excise tax on motor vehicles.

“Also acting as a drag on private consumption is the moderation in real purchasing power due to higher inflation,” ANZ said.

Inflation kicked up to a fresh five-year high of 4.5 percent in April from 4.3 percent in March, bringing the average inflation in the first four months to 4.1 percent and breaching the two to four percent target set by the Bangko Sentral ng Pilipinas (BSP).

ANZ was expecting the BSP’s Monetary Board to keep interest rates steady on Thursday. However, the risk of a rate hike increased as the BSP said it was prepared to take measures to protect price and financial stability.

ANZ sees the country’s GDP growth easing to 6.4 percent this year and to 6.2 percent in 2019 from 6.7 percent in 2017.

On the other hand, StanChart expects a 6.9 percent growth for the Philippine economy in the first quarter.

Economic managers penned a GDP growth of seven to eight percent this year.

The Philippines managed to book 76 quarters of uninterrupted growth with the GDP expanding by 6.5 percent in the fourth quarter of last year from the revised seven percent in the third quarter.

The BSP has maintained an accommodative policy stance for more than three years to support the growing economy through a low interest rate regime.