Philippines: Slower growth seen for Q1
MANILA, Philippines – Dutch financial giant ING Bank expects a slower growth of six to 6.2 percent for the Philippine economy in the first quarter due to moderate government spending and higher unemployment.
Joey Cuyegkeng, senior economist at ING Bank Manila, said the investment bank’s gross domestic product (GDP) growth forecast for the first quarter is lower than the assumption of economic managers as growth concerns were slightly higher as a result of slower government spending in January.
“Government expects first quarter growth of between 6.5 and seven percent. We are less optimistic. We expect first quarter growth of around six to 6.2 percent,” Cuyegkeng said.
The projected GDP expansion in the first quarter of the year is weaker than the revised 6.8 percent growth booked in the same quarter last year.
He said the fiscal performance of the national government was slower in January compared to the same month last year despite higher tax collections.
“The more moderate government spending growth together with higher unemployment, slower manufacturing indices and higher inflation are likely to weigh on overall economic activity in the first quarter,” Cuyegkeng said.
Latest data from the Bureau of the Treasury showed the national government booked a budget surplus of P2.2 billion in January, a reversal from the P3.47 billion deficit recorded in the same month last year.
Government revenue rose 10 percent to P200.3 billion from P182.23 billion while spending went up seven percent to P198.1 billion from P185.7 billion.
The country’s GDP growth accelerated to 6.8 percent last year from 5.9 percent in 2015 due to robust consumption fueled by election related spending as well as higher investments.
The country’s robust economic expansion has allowed the Bangko Sentral ng Pilipinas (BSP) to keep its dovish policy stance as it last adjusted interest rates in September 2014.
“Domestic demand is expected to remain strong and does not require additional monetary stimulus,” he said.
Last Thursday, the BSP kept interest rates steady and trimmed its inflation forecasts to 3.4 instead of 3.5 percent for this year and to three instead of 3.1 percent for next year.
“The upward trend of inflation is expected to be more moderate than earlier expected,” Cuyegkeng said.