Economic growth in the first quarter will likely slow to a range of 6 percent to 6.2 percent, on moderate fiscal spending, sluggish manufacturing and faster inflation, a foreign bank said Monday.
“The government expects first-quarter growth of between 6.5 percent and 7 percent. We are less optimistic. We expect first-quarter growth of around 6 percent to 6.2 percent,” ING Bank Manila senior economist Joey Cuyegkeng said in a report.
Cuyegkeng said government spending slowed in January. Latest data from the Bureau of Treasury showed that the national government posted a P2.2-billion fiscal surplus in January 2017, a reversal of the P3.5-billion deficit a year ago, as revenue collections grew faster than expenditures.
“The more moderate government spending growth, together with higher unemployment, slower manufacturing indices and higher inflation are likely to weigh on overall economic activities in the first quarter,” he said.
Unemployment rate increased to 6.6 percent in January 2017 from last year’s 5.7 percent. While higher than the previous year, it was lower than the average of 7.4 percent recorded from 2006 to 2015.
The National Economic and Development Authority said the increase in unemployment rate was partly due to the temporary election-related jobs. This was also observed in January 2011, a year that followed the 2010 elections.
The growth of manufacturing in January decelerated to 9.3 percent from the 35.8-percent expansion a year ago, despite the increased production of basic metals, transport equipment, petroleum products and food manufactures for the month.
Meanwhile, inflation in February accelerated to 3.3 percent from 2.7 percent in January, the fastest in 27 months, driven mainly by upward price adjustments in food and non-food items.
The February print was also the first time in more than two years that inflation breached the 3-percent mark. The last time inflation settled beyond the 3-percent level was in November 2014 at 3.7 percent.
Cuyegkeng expressed confidence that the rebound of exports”•driven by sustained demand for local products abroad”•coupled with the robust remittances from overseas Filipinos would continue to drive economic growth.
Money sent home by Filipinos working overseas grew 8.6 percent in January to $2.2 billion from a year earlier.
The 5-percent expansion surpassed Bangko Sentral’s projection of a 4-percent growth last year and the 4-percent actual growth a year ago.
Economists from First Metro Investment Corp. and University of Asia & the Pacific said in a joint report that the Philippine economy would likely grow above 6.5 percent in the first quarter.
“Despite a high base in the first quarter of 2016, we think GDP growth in the first quarter of 2017 will exceed 6.5 percent as all indicators, except faster inflation, signal sturdy output expansion in the current quarters,” the economists said.
The economy grew 6.8 percent last year, near the upper band of the Duterte administration’s target range of 6 percent to 7 percent for the year.