GDP growth slower in Q4 2012, say analysts

Growth may have slowed down in the fourth quarter of 2012 due to waning base effects, but the full-year average will still top the government's 5 to 6 percent target, analysts polled by GMA News Online showed. 

 

A survey of 16 analysts showed a median forecast of 6.2 percent gross domestic product (GDP) growth in the fourth quarter of 2012, and a median forecast of 6.3 percent for the full year or slightly below the National Economic and Development Authority (NEDA) forecast of 6.5 percent for the whole of 2012. 

 

Official GDP data will be released this Thursday, Jan. 31. 

 

Last week, Socioeconomic Planning Secretary Arsenio Balisacan kept his expectation that growth will settle at “around” 7 percent in the last quarter and 6.5 percent for the whole of 2012. 

 

The growth drivers in the fourth quarter are construction activity, government spending, and robust consumption fueled by remittances from overseas Filipinos. 

 

“The strong fourth quarter GDP was due to recovery or continued growth in public spending,” said Security Bank Corporation economist Patrick Ella, who projected a 7-percent fourth quarter GDP. 

 

“Private construction is also better in fourth quarter,” he added. 

 

University of Asia and the Pacific senior economist Victor Abola said, “Basically, construction is very much okay—both public infrastructure and private—private is driven by residential and commercial construction. 

 

“Fourth quarter spending is still very high growth... [from a year earlier],” he added, giving a 6.3 percent fourth quarter growth forecast. 

 

Government expenditures grew 14.1 percent to P1.536 trillion in the eleven months to November. Disbursements for infrastructure and other capital outlays in the January to November reached P185.6 billion, up 57 percent. 

 

Metropolitan Bank & Trust Co. Ildemarc Bautista gave a 6.8 percent GDP projection in the fourth quarter.  

 

“We have a very consistent GDP on the back very robust consumption expenditure,” he said. 

 

“Remittances and government spending are expected to do most of the uplift for growth, as they would have likely accelerated,” said Trinh Nguyen, HongKong-based economist at HSBC Ltd.

 

In the first 11 months of 2012, remittances totaled $19.416 billion, up by 6 percent year-on-year and topping the central bank's 5 percent forecast. 

 

Analysts noted that the slower fourth quarter GDP was caused by waning base effects. “The tapering growth, when compared to Q3 (third quarter) 2012, can be attributed to base effects, but its clear that our growth potential has been raised,” said Jackson Ubias, research director at Institute for Development and Econometric Analysis, an independent research outfit based in the University of the Philippines in Diliman, Quezon City.  

 

Security Bank's Ella said third quarter 2011 “was the lowest point for that year, so you should see relatively strong third quarter in 2012.”

 

GDP settled at a stronger-than-expected 7.1 percent in the third quarter, pushing the year-to-date average at 6.5 percent. 

 

“For 2012 as a whole, the foundation of accelerated economic growth was broad-based. It seems that the stability of the services sector, dollar remittances, and exports can deliver,” said Ubias. 

 

Despite faring below the 8 percent target, merchandise exports grew by 7 percent to $48.03 billion in January to November from a year earlier. 

 

2013 growth drivers

 

Election spending and higher spending on infrastructure due to roll-out of big-ticket projects under the Aquino administration's public-private partnership (PPP) program are seen as main growth drivers for 2013, analysts noted. 

 

“Positive momentum will spill over into this year. With general elections due in mid-2013, government spending has already ratcheted up and is likely to stay elevated before easing in 2H (second half),” said Eugene Leow, Singapore-based economist at DBS Bank Ltd. 

 

Noting the momentum building up in the pace of PPP project roll-outs, Leow said, “Construction on projects bid out early this year should provide a boost to headline GDP growth.” 

 

“We are at a better growth track,” said Security Bank's Ella. “If you just look at the improvements in the structure of the economy, there really are improvements,” he added. — VS, GMA News