GDP growth estimated at 7% in Q1 -- First Metro, UA&P
THE Philippine economy likely expanded by at least 7% during the first quarter due to the rebound in exports and farm output, analysts at First Metro Investment Corp. (FMIC) said yesterday, placing the country on track to achieve the government’s growth goal for the year.
Gross domestic product (GDP) likely climbed by 7% in the three months to March, which if realized would represent an acceleration from the 6.6% rise during the fourth quarter and 6.8% in the year-earlier period. A 7% outcome would also be the midpoint of the government’s 6.5-7.5% target for 2017, and would maintain the economy’s position as one of the fastest-growing in Asia.
“The Philippine economy is expected to achieve 7% or higher GDP growth in Q1 as solid recovery of agriculture and double-digit expansion of exports add the needed boost for GDP to hit 7% or higher. Capital goods imports and construction spending should continue to lead robust investment spending,” according to the May issue of the Market Call released by FMIC and the University of Asia & the Pacific (UA&P) on Tuesday.
The Philippine Statistics Authority (PSA) will report first-quarter GDP data on Thursday. Socioeconomic Planning Secretary Ernesto M. Pernia said growth likely hit 7% for the first quarter and repeat that feat in the second.
On Monday, the PSA reported a 5.28% recovery in farm production during the first quarter, a turnaround from a 4.62% contraction observed in January-March 2016 on the back of “good” weather conditions compared to a year earlier.
Merchandise exports grew by 18.3% as of end-March, reversing an 8.4% contraction a year earlier. A corresponding 18.6% surge in imports, however, led to a wider trade deficit at $6.54 billion against $5.488 billion during the year-earlier period, according to PSA data.
“The emerging positive exports growth story since Q4-2016 suggests improving global demand and we believe that this trend will continue in the coming months. This should add impetus to the reliably robust domestic demand,” the report read.
Domestic demand is likewise expected to remain a key growth driver, as seen in solid construction activity and rising factory output observed during the first three months of the year, FMIC analysts said, referring to double-digit growth in manufacturing.
Meanwhile, inflation is expected to remain manageable as it steadied at 3.4% in March and April, keeping it within the central bank’s 2-4% target band. This, in turn, would allow the Bangko Sentral ng Pilipinas to keep interest rates steady until June, the economists said.
On the other hand, FMIC said sustaining the Philippines’ upbeat growth story relies heavily on the rollout of big-ticket infrastructure projects in the pipeline, coupled with raising additional revenue to be generated by the Finance department’s tax reform proposals.