PH economy seen to recover in Q2 2015

MANILA, Philippines — The Philippine economy in the second quarter could have recovered from the slowdown in the first 3 months of the year, after seeing higher government spending and an ease in inflation.

First Metro Investment Corporation (FMIC), the country’s leading investment lender, said “the early second quarter signs point to a definite recovery…Although there are still some negative signals, the outlook seems more promising.”

During the first quarter, the Philippine gross domestic product (GDP) growth stood at only 5.2% – the slowest pace in 3 years – weighed down by weak exports and government underspending.

The first quarter performance is far from the government’s full-year target growth of 7.5% for 2015.

FMIC said the January to March slowdown was “likely temporary.”

“[T]he strong job growth (quarter on quarter) and very low inflation rates for the rest of second quarter should boost consumer and firm spending,” FMIC said in its July 2015 edition of The Market Call.

Philippine inflation, or the increase in prices of widely used goods, fell to a record low of 1.2% in June.

The lower-than-expected inflation, dragged down by stable to lower food prices, should “encourage more consumer spending in the second quarter onwards,” the investment leader said in its report.

Government infrastructure spending during the second quarter suggested a rebound from overall underspending in the first quarter, after boosting its expenditures by 9% last April.

“The Philippine economy appears headed to a more sanguine second quarter performance as,” FMIC said.

The positive outlook of FMIC for the economy is strengthened by higher consumer spending fueled by overseas Filipino workers’ (OFWs) remittances.

Consumer spending was bolstered by OFWs’ remittances, which were 5.1% higher in April.

The Philippines even registed a balance of payments (BOP) surplus of $877 million in the first quarter, a huge reversal from the  $4.1-billion deficit in the same quarter of 2014, on the back of strong remittance inflows and higher business process outsourcing earnings.

The BOP summarizes an economy’s transactions with the rest of the world for a specified time period. – Rappler.com

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