PH economy on track to post growth above 7% in 3rd quarter
The Philippines is expected to retain its crown as Southeast Asia’s fastest-growing economy as latest economic indicators show encouraging signs that point to strong demand from consumers and higher output from manufacturers.
In a report, First Metro Investments Corp. (FMIC) said the domestic economy likely completed its fifth consecutive quarter of “fairly rapid” growth in terms of gross domestic product (GDP) in the July-to-September period of the year.
“The latest economic numbers continue to inspire optimism regarding the economy’s ability to post another above-7 percent GDP growth in the third quarter,” FMIC said in its Market Call report for October.
FMIC noted that gains in electricity sales and industrial output were accelerating and it was likely that the industrial sector led other sectors in terms of growth in the third quarter.
The investment firm also pointed out that infrastructure spending of the government continued to grow by more than 30 percent, which should improve productivity across the country.
Another major factor that could contribute to the country’s growth prospects was the peso’s recent depreciation against the dollar. A weaker peso makes local exports cheaper for foreigners to buy. It also makes every dollar send home by migrant workers worth more in peso terms.
FMIC said the weaker peso “should translate in more robust consumer spending and support for residential construction.”
FMIC said the local currency’s 3.5-percent depreciation year-on-year against the greenback amplified the growth of the overseas Filipino workers’ (OFWs) remittances in peso terms to 10.2 percent in July, the highest in the past 49 months.
“This is significant as it would provide another leg for the increase in domestic savings,” FMIC said.
Increases in remittances were observed in Saudi Arabia, United Kingdom, Canada, Japan and Norway—countries which accounted for 27.6 percent of the total remittances. FMIC expects dollar remittances to the Philippines to increase by 4 to 6 percent this year.
The steady deployment of OFWs was likely to remain the key driver of the growth in remittance flows, FMIC said.
