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Philippines: Economy grew at faster pace in Q4 — bank economist
MANILA, Philippines — The economy likely grew at a faster pace in the fourth quarter of 2019 due to the recovery in capital formation and public spending, according to Security Bank Corp.
In a statement, Robert Dan Roces, chief economist at Security Bank, said the economy may have grown by 6.6 percent in the last quarter of 2019, faster than the 6.2 percent growth in the third quarter and 6.3 percent in the fourth quarter of 2018.
He said this would result in an average GDP growth of six percent for full-year 2019, the lower end of the government’s target. This was, however, slower than the 6.2 percent growth in the previous year.
Roces attributed the fourth-quarter acceleration to the improvement in capital formation, household consumption and public spending.
“With inflation returning to the two to four percent central bank target range in December and the RR (reserve requirement) cuts lending increased liquidity, capital formation looks better for the quarter,” Roces said.
“This, plus household consumption that was higher especially in the holiday seasons. Government spending was also better for that quarter,” he said.
Going forward, Roces said Security Bank expects inflation to remain within the target range, albeit some bumps in the first few months due to the eruption of Taal Volcano, which affected some industries in south Luzon.
“We are still optimistic on growth on the back of a double dose of stimulus from the timely passage of the 2020 budget and the extension of the validity of the 2019 version,” he said.
Furthermore. Roces said the BSP is expected to continue its accommodative track, which may translate to a 25-basis point cut in interest rates within the first quarter, and at least 200-basis points reduction in banks’ RRR this year.
The economy expanded by 6.2 percent in the third quarter of last year, faster than the six percent recorded in the same quarter of 2018 and 5.5 percent in the previous quarter.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno earlier said the economy likely expanded between 6.4 percent and 6.5 percent in the fourth quarter of 2019, bringing the full-year 2019 growth to six percent.
In its latest meeting, the inter-agency Development Budget Coordination Committee (DBCC) trimmed down the government’s GDP growth target to a tighter range of six to 6.5 percent for last year.
Source: https://www.philstar.com/business/2020/01/17/1985372/economy-grew-faster-pace-q4-bank-economist