MANILA, Philippines – Credit Suisse upgraded its 2017 economic growth forecast for the Philippines on the back of stronger-than-expected gross domestic product (GDP) expansion in the 2nd quarter of the year.
Michael Wan, economist at Credit Suisse, said they now expect the country's GDP to grow faster at 6.1%, instead of 6%, this year, although a moderate economic expansion is seen in the 2nd half.
"We adjust our 2017 GDP up slightly to 6.1% from 6%. Moving forward, we continue to expect GDP growth to moderate in the 2nd half of 2017 from 1st half of 2017," Wan said. (READ: Philippine GDP grows faster by 6.5% in Q2 2017)
The economist also said private consumption would begin to weaken due to "an unusually weak labor market."
"Our detailed analysis shows that employment growth feeds into consumption with a 3-quarter lag. As such, the negative impact of a weaker labor market will likely be felt keenly over the rest of this year," Wan explained.
He added that exports would continue to moderate in the 2nd half after a strong performance in the 1st half of the year.
"The main surprise to us was the strength in goods exports, which contrasts with the moderation in monthly exports that we have seen. This divergence could be driven by a decline in export prices, with export volumes holding up much better," he said.
The country's GDP growth accelerated to 6.5% in the 2nd quarter from 6.4% in the 1st quarter, bringing the growth to 6.4% in the 1st half of the year.
Economic managers, through the Development Budget Coordination Committee (DBCC), see the country's GDP growing between 6.5% and 7.5% this year. (READ: Gov't spending, agriculture lift Philippine GDP in Q2 2017)
Strong investments and higher private consumption boosted by election-related spending translated to a faster GDP growth of 6.9% last year from 5.9% in 2015.
The Philippines has booked 74 quarters of uninterrupted growth as the country's GDP last contracted in the 4th quarter of 1998.
In 2013, debt watchers led by S&P Global Ratings, Moody's Investors Service, and Fitch Ratings upgraded the Philippines' credit rating to investment grade. – Rappler.com