Q1 GDP to hit govt target — economists

Sluggish trade tamed economic expansion last quarter, but domestic consumption remained robust bolstering output to the government’s growth goal, economists polled by GMA News Online said. 

 

A poll of nine private sector economists yielded a median forecast of 6 percent first quarter gross domestic product (GDP) growth, at the lower end of the government’s 6 to 7 percent target this year. 

 

The market consensus is lower than the first and fourth quarters of 2012’s actual 6.4 percent and 6.8 percent growth, respectively.

 

First quarter growth remains “on-track” to hitting the target, Socioeconomic Planning Secretary Arsenio Balisacan said ahead of the official data release this Thursday, May 30.  

Trade a drag

 

Some analysts said poor trade performance last quarter caused their slower forecast.

 

“With slowing remittance inflow and contracting exports and imports, the output level for 1Q (first quarter) 2013 will likely rise at a slower pace than 4Q (fourth quarter) 2012,” said HSBC economist in Hong Kong Trinh Nguyen. 

 

Metropolitan Bank & Trust Co. research head Ildemarc Bautista shared the view, saying: “Some base effects from last year’s Q1 trade numbers should be tamer this year.”

 

In the first quarter, trade deficit narrowed by a slimmer 13.3 percent compared to the 23.8 percent cut in the same period in 2012 when exports surged and imports contracted.  

Robust consumption

 

Singapore-based economist for DBS Bank Ltd. Eugene Leow said “domestic demand strength, however, have held up well.”

 

“Domestic economy is likely to be supported by strong consumer confidence, steady remittance growth and a surge in investment spending,” Standard Chartered economist in Singapore Jeff Ng said, adding that election-related spending “could have fueled domestic growth as well.”

 

Leow also said “weakness in goods exports are likely to be offset by continued strength in services exports.”

 

Some still see brisker Q1 growth 

 

Other economists, however, are more optimistic. “Consumption and capital formation, largely investments on durable equipment, are top contributors,” said Bank of the Philippine Islands economist Emilio Neri Jr., giving the highest projection of 6.9 percent.  

 

Agriculture, which has been a drag to growth in the past, posted a “modest” 3.3 percent growth in the first quarter, added Neri. 

 

Security Bank economist Patrick Ella, who gave a forecast of 6.8 percent, said “surprises should be in the manufacturing and government spending accounts.” 

 

Sustaining growth 

 

GMA News Online’s poll shows a median forecast of 6.05 percent full-year 2013 growth, slower than last year’s 6.6 percent. 

 

Neri said he is a “bit concerned” on the remaining quarters amid waning effects of election spending. “It’s a front loaded forecast, hopefully more spending in the government side would kick in,” he noted. 

 

“Accelerated activity, probably new projects by the government, will come in the second half, supporting growth further this year,” said ING Bank NV economist Joey Cuyegkeng. 

 

For the coming years, Standard Chartered’s Ng said: “We are optimistic that GDP growth will remain resilient in the Philippines,” forecasting “fairly strong” 6.1 percent growth in 2014 and 5.5 percent in 2012. 

 

Security Bank’s Ella noted that sustained “corruption reform, ease of doing business and government transparency” are still needed to attract much needed investments boosting the country into a higher growth trajectory. — RSJ, GMA News