Philippines: Consumption, infrastructure spending to fuel up to 6.6% growth — FMIC
MANILA, Philippines — Economic growth momentum is expected to be sustained this year, accelerating to a range of 6.2 to 6.6 percent, fuelled by “magnified” consumer spending and the continuation of the government’s catch-up spending plan for infrastructure, First Metro Investment Corp. (FMIC) said.
Officials of the investment banking arm of the Metrobank Group said several indicators such as robust government and infrastructure spending, higher employment rate, manageable inflation, and strong OFW remittances amid tensions in the Middle East reflect a favorable environment for consumption.
“The Philippine economy will grow faster in 2020 compared to 2019, fuelled by stronger consumer spending, easing monetary conditions and growing tourism sector. Consumer spending, which accounts for 66 percent of the country’s gross domestic product (GDP), will expand further,” said FMIC president Rabboni Francis Arjonillo.
FMIC expects the economy to have grown by six percent in 2019. Official data so far states a nine-month GDP growth average of 5.8 percent alongside a third quarter 2019 growth rate of 6.2 percent.
The fourth quarter growth figure and the 2019 average will be announced by the Philippine Statistics Authority on Jan. 23.
“Last year was the year of the consumer. We will start this decade that will be the great decade of the Filipino consumer. At the end of the day, after all the volatility and uncertainty last year, what grew slowly but steadily was consumption,” said FMIC chairman Francisco Sebastian.
“The reduction of poverty in the Philippines, the growth of six percent in the last few years is now cascading down to the poor sector. When you reduce the poor sector, that means consumption,” he added.
Lower unemployment numbers were seen at the beginning of the fourth quarter in October as all economic sectors were able to create more jobs.
Results of the October 2019 round of the Labor Force Survey (LFS) showed unemployment falling to 4.5 percent in the October 2019 round from 5.1 percent in the same period last year, the lowest in all October rounds in a decade.
Preliminary results for the entire 2019 showed that based on the average of the four LFS rounds— January, April, July and October, the unemployment rate fell to 5.1 percent in 2019 from 5.3 percent in 2018.
Poverty incidence, meanwhile, pertaining to the proportion of Filipinos whose per capita incomes were not enough to meet their basic food and non-food needs, fell to 16.6 percent in 2018 from the revised 23.3 percent in 2015, according to government data released in December.
FMIC also noted that tourist arrivals have grown by 15 percent from January to October 2019 to 6.8 million from 5.9 million, mostly Koreans and Chinese, a trajectory that is expected to be sustained in 2020.
Remittance from OFWs is expected to sustain growth of two to four percent this year.
Inflation, meanwhile, can be expected to stabilize at a range of 2.5 percent to 2.8 percent this year.
Victor Abola, economist of the University of Asia and the Pacific (UA&P), said the Philippines is expected to recover from slow growth in domestic demand in 2019 resulting from the delay in the passage of enactment of the national budget that slowed down government expenditure for priority programs and infrastructure projects.
“There is going to be no let-up in infrastructure spending,” said Abola.
He noted that alongside robust demand, the services and industry sector will match this with production especially those engaged in construction.