MANILA, Philippines—The Philippine economy likely grew by slightly less than 6 percent in the first quarter due largely to exports, construction, remittances and industrial production, a joint research by First Metro Investment Corp. and University of Asia and the Pacific said.
In its latest joint research “The Market Call” released on Wednesday, FMIC-UA&P said weaker electricity sales and job generation were pointing towards a slowdown in first quarter gross domestic product (GDP) growth compared to the robust performance of the previous quarters. “Higher headline inflation rate also may eat up a part of consumer spending strength,” it said.
The research noted that February sales of power distributor Manila Electric Co. had increased in terms of actual levels but were showing signs of an economic slowdown. Looking at annual growth rates, it is still following the downward trend established during Q4 2010 as it went down from January’s 2.3 to 1.3 percent in February.
But the FMIC-UA&P research noted that January’s industrial production had jumped by 25.8 percent while exports managed to keep their double-digit growth pace at 11.8 percent. It added that the government’s fiscal picture seemed to be in order and remittances remained buoyant.
“All told, we think first quarter GDP growth is likely to ease, but probably, not by much,” the research said.
In the fourth quarter of 2010, GDP grew by 7.1 percent, bringing the full year growth to 7.3 percent—the highest for the country in the post-Marcos era.
Despite the social unrest in oil-rich Middle East-North African region, FMIC-UA&P said remittances would likely remain buoyant as it observed that many Filipinos working in the Middle East were deciding to stay put.
On the other hand, inflation was seen remaining below 5 percent for the rest of the first semester. Thus, FMIC-UA&P does not expect any further policy rate changes for second quarter.