The Philippine economy likely grew 6.8 percent year-on-year in the first quarter, faster than the actual expansion of 6.5 percent in the fourth quarter of 2017 and 6.4 percent a year ago, on robust consumer spending and higher government expenditures, Moody’s Analytics, a division of Moody’s Corp., said in a report over the weekend.
“The Philippine economy likely grew 6.8 percent year-on-year in the first quarter, after a 6.5-percent lift in the December [fourth] quarter. The economy is in somewhat of a sweet spot,” said Moody’s Analytics, which operates independently of the global credit rating agency Moody’s Investors Service.
“Consumer spending is rising at a healthy pace, thanks to steady inflows of overseas worker remittances and a firm labor market. Investment has been robust and is likely to remain strong as the government boosts infrastructure development,” it said.
Moody’s Analytics said the upswing in external demand was providing a lift to exports which saw declines in the past months. “Along with favorable demographics, these factors are likely to see the Philippines remain one of the fastest-growing economies in the region in coming years,” it said.
The government is scheduled to release the first-quarter gross domestic product data on May 10.
The local unit of Dutch financial giant ING Bank earlier revised upward its first-quarter growth projection for the Philippines from 6.5 percent to 6.9 percent, taking into account the acceleration of government spending during the period.
ING Bank Manila senior economist Joey Cuyegkeng said in a report the full-year GDP growth in 2018 would likely improve to 6.8 percent from an earlier estimate of 6.7 percent.
“Headline and core government spending growth rates accelerated in February to 37 percent and 35 percent, respectively. These annual increases are not just a result of base effects with February 2017 spending of near flat YoY,” he said.
Cuyegkeng said the government policies of a “cash-based budget” and a one-year effectivity of the approved budget procurement program pushed government agencies to improve spending performance.
He also said February’s spending acceleration resulted in a two-month average headline and core spending growth rates of 26 percent and 27 percent, respectively. The performance brought spending growth on track to a 31-percent growth for the first quarter which would be around 15 times faster than the first-quarter 2017 growth of only 2 percent, he said.
He said the fiscal stimulus would likely bring the first-quarter GDP growth closer to the government’s 2018 target growth of 7 percent to 8 percent.
GDP grew 6.7 percent in 2017, but economists predicted that growth would be more robust this year at 7 percent to 8 percent on massive infrastructure spending.
Private economists from First Metro Investment Corp. and University of Asia & the Pacific said in a joint report that the economy could grow faster than 7 percent in the first quarter.
Citing latest available data, the economists said that in the first month of 2018 alone, the economy added 2.4 million jobs, the highest in a non-election year, with the industry sector―construction and manufacturing contributing the biggest boost―clearly making a headway.
Manufacturing also surged 21.9 percent in January from a year earlier, providing support to the robust job numbers, the economists said.