Citi sees 6.5% GDP growth for 2nd quarter

Philippine economic growth likely eased to 6.5 percent year-on-year in the second quarter partly due to a lower contribution from external trade, American banking giant Citigroup said.

In a commentary dated Aug. 23, Citi economist for the Philippines Jun Trinidad tempered the outlook for second-quarter gross domestic product (GDP) growth versus the bank’s earlier 6.8-percent forecast and the 7.8-percent expansion earlier reported for the first quarter.

The country’s second-quarter report card is set to be released on Thursday. The market consensus points to a growth of 7.3 percent.

Quarter-on-quarter seasonally adjusted growth in the second quarter was likewise estimated to have eased to 0.6 percent from 2.2 percent in the first quarter. Trinidad said the slower forecast would be due to lackluster trade contribution and the start of financial market volatility due to quantitative easing (QE) tapering risk, referring to the phaseout of the US Federal Reserve’s liquidity-inducing $85-billion monthly asset buying.

“We revised our earlier second-quarter GDP growth estimate of 6.8 percent year-on-year to 6.5 percent year-on-year recognizing that the net export contribution may have been less at 1.9 percent of real GDP compared to the previous estimate of 2.2 percent,” Trinidad said.

The economist said that with the Bureau of Customs’ trade data in the second quarter providing clues on exports (which fell 2.7 percent year-on-year) and imports (up 0.6 percent year-on-year), Citi revised lower its second-quarter export and import forecasts for GDP that resulted in a lower net export contribution during the period.