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Friday, March 29, 2024

DBS sees economic growth at 6.5%

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The Philippine economy will not likely attain a 7-percent expansion this year, as the strong investment growth is expected to moderate in the coming months, a Singaporean bank said over the weekend.

“Given that there has been a front-loading of investment ahead of the May elections, however, we reckon that there will be a moderation in growth momentum going forward. The sharp spike in investment growth over the past two quarters is not sustainable,” DBS Bank said in a report.

It said investment growth averaged 24.9 percent in the past two quarters. On a two-quarter average basis, the bank said the first quarter to second quarter of 2010 was the only other occasion when investment growth was above 20 percent.

“Not surprisingly, it was also a pre-election period. At this juncture, we reckon that full-year GDP growth will be closer to 6.5 percent rather than 7 percent,” DBS said.

It said investment growth was a robust 25.6 percent in the first quarter, the strongest in five years. Private consumption growth also reached 7 percent, the highest in three years. This resulted in a GDP growth of 6.9 percent, higher than 5 percent a year ago.

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DBS said despite the possibility of not growing by 7 percent in 2016, “as long as the region is concerned, the Philippines remains as one of the fastest-growing economies, up there with India and China.”

Meanwhile, Nomura Group said the Philippine economy had the potential to grow by 6.5 percent this year, higher than the revised 5.9 percent in 2015, as the incoming administration of president-elect Rodrigo Duterte was not expected to veer away from the economic reforms of the Aquino administration.

“For 2016, we reiterate our GDP growth forecast of 6.5 percent from 5.9 percent in 2015. Our forecast implies a further pickup in the second quarter likely to above 7-percent growth, before moderating slightly as the impact of election-related spending fades,” Nomura said.

“Our baseline view remains that President-elect Duterte’s policy approach will be pragmatic and he is unlikely to reverse the reforms implemented by the outgoing Aquino administration,” it said.

 

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