Global financial institutions raised their growth forecasts for the Philippines this year, after the government announced a gross domestic product expansion of 7 percent in the second quarter.
The second-quarter expansion was faster than the revised 6.8-percent growth in the first quarter. This brought the first-half average to 6.9 percent, near the upper bound of the government’s official target range of 6 percent to 7 percent.
Japanese financial firm Nomura said it raised its 2016 GDP growth forecast for the Philippines to 6.7 percent from 6.3 percent.
“This revision is supported by the solid first-half growth average of 6.9 percent, an impact from the Brexit vote that was more contained than our initial expectations and, more importantly, by the Duterte administration’s commitment to policy continuity in implementing economic reforms and building infrastructure,” Nomura said in a report over the weekend.
“In our view, these factors should keep GDP growth robust in the second half, averaging 6.5 percent even as the election-related boost to growth in the first half fades,” Nomura said.
Nomura also raised its 2017 GDP growth forecast to 6.3 percent from 6 percent, saying fiscal support to growth would remain strong, given the pragmatic and pro-growth stance of the new government.
The strong second-quarter performance also encouraged Credit Suisse to upgrade its growth forecast for the Philippines this year to 6.5 percent from a previous estimate of 6.2 percent, despite the expected slowdown in the second half.
“We expect some slowdown in the second half of 2016 reflecting fading of election effect, but maintain our above consensus call on GDP. We raise our already above consensus Philippines GDP forecast further, to 6.5 percent from 6.2 percent, on the back of the stronger first-half GDP,” it said.
Credit Suisse said the overall positive view of the Philippine economy would remain, driven by strength in private consumption, boosted by the increase in government salaries, a tighter labor market and lagged impact of lower oil and rice prices.
Meanwhile, J.P. Morgan said the Philippine economy had the potential to grow 6.4 percent this year, as President Rodrigo Duterte planned to accelerate spending that could lift domestic investment.
“Our growth narrative of the Philippine economy remains broadly unchanged; that is, domestic demand will likely remain robust due to investment growth which could further lower external balances,” J.P. Morgan said.
DBS Bank of Singapore said the Philippine economy would likely expand 6.6 percent this year.
