Median estimate by analysts places PHL Q3 GDP at 6.28%

Government underspending, plus weaker output from agriculture and manufacturing are putting a dampener on the Philippine economy that analysts and economists say will likely turn out to have been sluggish in the third quarter of the year.

 

Five private sector economists and analysts polled by GMA News Online yielded a median estimate of 6.28 percent in July to September, below government’s 6.5 to 7.5 percent target this year.

 

The consensuses is higher compared with second quarter's actual 6.4 percent growth, but lower than the 6.9 percent for the third quarter of 2013.

 

Most analysts noted strong consumer spending in the three months to September.

 

Trinh Nguyen, Hong Kong-based economist for British banking giant HongKong Shanghai Banking Corporation (HSBC) Limited, noted "private consumption is expected to accelerate in the third quarter, supported by the strong remittances."

 

Lexter Azurin, Unicapital Securities Inc. research head, shared the same view, saying economic expansion will still be driven by robust consumption.

 

"[This is] followed by sustained rise in remittances," he noted. Azurin gave a growth forecast of 6.5 percent in the third quarter. During the period, remittances rose 6.5 percent. 

 

In January to September, cash remittances reached $17.6 billion, up 6.1 percent from 16.6 billion in a year earlier, according to latest data from Bangko Sentral ng Pilipinas

 

Another driver for growth is robust exports, analysts said.

 

"Export numbers were strong, and grew double-digit in the third quarter," Security Bank Corp. economist Patrick Ella said. 

 

In January to September, exports expanded by 9.9 percent to $46.6 billion.

 

Public spending

Despite a good showing in private consumption and exports, most analysts grumbled over public spending that weighed on economic expansion.

 

In a research note, ING Bank N.V. senior economist Joey Cuyegkeng gave a 6.3 percent growth outlook for the third quarter.

 

"Underspending of government is one cause of slower growth. Weak agriculture performance in third quarter is another," he said.

 

HSBC's Nguyen noted a 1.8 percent contraction in government spending, which will "likely drag down the growth momentum.

 

"With capital goods imports declining, we expect investment to be sluggish; as such, despite strong private spending and better net exports, GDP is expected to decelerate," Nguyen said.

 

HSBC expects the third quarter growth to settle at 5.7 percent. 

 

Government failed to increase spending, Metropolitan Bank & Trust Company research head Ildemarc Bautista said.

 

"We don't see government and investment spending. It hasn't really picked up yet. It's all consumer spending," he said.

Economy is resilient

 

Offering a contrarian view is Security Bank's Ella. 

 

While government underspending was a potential dampener, the economy is resilient enough, even with the disappointing public disbursements, he said.

 

"In the first two quarters, the economy has performed pretty well despite a lack of government spending," Ella noted.

 

"I wouldn't put much on that discounting that they have failed to meet targets, but the economy remained strong," Ella added. 

 

He gave a 6.8 percent growth estimate for the quarter. – VS, GMA News