PH economy to grow 5.5%-6% in 2012 – think tank

MANILA, Philippines – The Philippine economy is expected to post a 5.5% to 6% growth this year on the back of strong consumption and government spending.

In its latest issue of Market Call released Thursday, September 13, First Metro Investment Corp-University of Asia and the Pacific (FMIC-UA&P) Capital Market Research Center said growth will be robust even with weak global demand. 

A growth of 6% is at the high end of the government’s gross domestic product (GDP) growth target this year.

“Continued strong domestic consumption and further NG [national government] spending as well as improved bank lending performance will counter exports deceleration, dampened by weak global demand. These factors keep us optimistic that GDP growth in Q3 as well as for the whole year would settle at 5.5% to 6%,” FMIC-UA&P Capital Market Research Center said.

Slower Q3, but robust Q4

UA&P Senior Economist Victor A. Abola said a growth of 5.3% is expected in the third quarter. This is slower than what was seen in first two quarters of the year.

Among the factors for the slowdown is the strong peso, which could limit the spending of families of overseas Filipino workers (OFWs), and the spike in August inflation due to the recent typhoons and the southwest monsoon.

Abola said, however, that there will be a recovery in the fourth quarter to around 6% to 6.5% due to election spending both in the United States and the Philippines.

Election spending in the US will help boost demand for various goods and services from countries like the Philippines while the preparations for the local elections in May 2013 is expected to begin in the last quarter of this year.

“We expect a sharp deceleration of economic activity in August but a recovery in September. With NG [national government] able to spend more on infrastructures and operating expenses and a slight uptick in the US, the slowdown in Q3 will be minor. Meanwhile, Q4 recovery will be robust given election spending in the US and the beginnings of one in the Philippines,” the think tank said. – Rappler.com