Economic growth likely slowed down to 6.5 percent in the fourth quarter from 7.1 percent in the third quarter, on slower remittances, weak exports and sluggish factory output, Deutsche Bank said in a report over the weekend.
“Economic activity is normalizing, but we note some concerns. While still above trend, our growth momentum measure drifted lower in October/November as motor vehicle sales, remittances and factory output weakened pace [against non-oil imports, real credit growth and employment, which gained pace],” the bank said.
It said manufacturing output was weighed down by slower input buying and employment. Exports were unlikely to prop up overall output, with growth pared down by higher commodity prices, it said.
“As such, the trade balance is again likely to contribute negatively to GDP growth in the fourth quarter, with risk of a greater reduction owing to the spike in the November trade deficit,” it said.
“Overall, our bottom-up estimates suggest the fourth-quarter GDP growth may have eased to 6.5 percent from 7.1 percent year-on-year in the previous quarter. This slowdown in growth momentum, in our view, indicates a normalization of economic activity past the 2016 elections,” it said.
Latest data from Bangko Sentral showed that money sent home by overseas Filipino workers in October declined 3 percent to $2.099 billion from $2.164 billion a year ago.
The October remittances were the lowest in three months. This, however, still brought cash remittances in the first 10 months to $22.124 billion, or 4 percent higher than $21.266 billion a year ago.
Deutsche Bank said for the whole year, the economy likely grew 6.8 percent in 2016, higher than 5.9 percent in 2015. It predicted a 5.8-percent expansion in 2017 and 6-percent increase in 2018.
The bank said that while the medium-term outlook was propped with prospects of a nationwide acceleration in infrastructure development, it was also fraught with “risks of decelerating private sector investments, amid President Duterte’s highly controversial ‘war on [illegal] drugs’ which has claimed at least 6,200 lives since the new administration’s first full day on July 1.”
