GDP growth in the Philippines at three-year low

• Aug 10, 2018

MANILA: Economic growth in the Philippines weakened to a three-year low last quarter, missing all economists’ estimates. Stocks and the peso fell.

Gross domestic product (GDP) rose 6% in the second quarter from a year earlier, the Philippine Statistics Authority said in a briefing in Manila. That was the weakest pace since 2015, according to data compiled by Bloomberg.

The median estimate in a Bloomberg survey of 19 economists was 6.6%. Growth slowed from 6.6% in the first quarter. Compared with the previous quarter, GDP grew 1.3%.

President Rodrigo Duterte is building roads and railways, including a subway in traffic-clogged Manila, to boost the economy, which the government is targeting to expand 7% to 8% for this year.

Economic Planning Secretary Ernesto Pernia told reporters yesterday that the economy needs to grow 7.7% in the second half to meet this year’s goal.

The surprise slowdown last quarter may not be enough to halt the central bank from hiking interest rates, given a surge in inflation to the highest in more than five years.

But it throws in doubt whether governor Nestor Espenilla can deliver on a pledge to take “strong action” with a bigger-than-usual interest-rate hike of 50 basis points, as most economists in a Bloomberg survey had predicted before the release of the GDP data.

“We are still sticking to a 50 basis-point call,” said Angelo Taningco, an economist at Security Bank Corp in Manila.

“They need to combat inflation or else there’ll be greater impact on second-half growth.”

The benchmark stock index slid 0.8%, erasing earlier gains. The peso fell 0.1% to 53.11 per dollar.

Consumer spending, which accounts for about 60% of the economy, rose 5.6% in the second quarter from a year earlier while government spending gained 11.9%. Agriculture production rose 0.2%. — Bloomberg

Source: https://www.thestar.com.my/business/business-news/2018/08/10/gdp-growth-in-the-philippines-at-threeyear-low/#A58kU3OPwGPmwHEw.99