‘Stellar’ PH GDP growth in Q3 if not for exports drop – DBS Bank

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‘Stellar’ PH GDP growth in Q3 if not for exports drop – DBS Bank
DBS Bank Ltd of Singapore says the Philippine economy could have expanded by as much as 8% in the third quarter if not for the massive exports drop caused by weaker global demand

MANILA, Philippines – The country’s economic growth could have expanded by 8% in the third quarter, and not just by 6%, if not for the sharp drop in export earnings due to weak global demand, DBS Bank Ltd of Singapore said Friday, November 27.

“It is interesting to note that, taking net exports out of the equation, GDP growth would have been a stellar 8%, the fastest since early-2013,” DBS said.

The country’s gross domestic product (GDP) grew by 6% in the previous quarter, its fastest pace so far this year, driven by the gains of the services sector, improvement in state spending, and robust private consumption. (READ: PH GDP grows 6% in Q3)

“This is hardly surprising, given that budget spending jumped almost 20% in the September quarter,” DBS said.

With the global economy still weak, the country recorded a P58.8-billion trade deficit, a reversal from the P7.3-billion surplus last year, thus net exports plunged by 906.4%. (READ: PH exports post biggest decline in September)
 
Retained forecast

The investment bank is retaining its GDP growth forecast of 5.7% this year and 6.1% in 2016 despite the faster economic expansion in the third quarter of the year.
 
“Given that June quarter GDP growth has been revised up to 5.8%, full-year GDP growth is still set to come in at 5.7%. At this juncture, we continue to see GDP growth inching higher to 6.1% in 2016,” DBS added. (READ: GDP Q2 growth revised to 5.8%)

DBS added investments continue to grow twice as fast as the average pace seen in the last 10 years, as gross fixed capital formation growth rose 9.3% in the third quarter.

The bank also sees private consumption growing between 5.5% and 6% on the back of election spending in May next year.

“This is likely to offset any drag on public investment, amid concerns of possible delays to government projects due to the 2016 elections,” DBS said.

DBS also noted the 5.6% growth of the manufacturing sector, faster than the 4.7% growth in the second quarter.

“Note also that we have seen a bigger-than-expected drag from net exports in the period, due to some moderation in exports of services as well,” DBS added.
 
The robust growth in the third quarter brought the GDP expansion to 6.1% in the first 3 quarters of the year, from 7.1% in the same period last year.
 
Economic managers penned a GDP growth of 7%-8% growth target for 2015, from 6.1% last year.
 
However, officials have given up on the target, albeit unofficially, saying the country’s economic expansion would settle between 6% and 6.5% this year. (READ: 6.9% Philippine GDP growth in Q4 unlikely – economists) Rappler.com

DBS image via Shutterstock

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