FMIC: Economy to pick up from slowdown in Q1

The economy should recover from what could likely be a slowdown in growth in the first quarter as the government’s increased spending to rebuild typhoon-struck areas in Visayas goes into full swing, according to First Metro Investments Corp. (FMIC).

Growth in 2014 is expected to top 7 percent for the second consecutive year, said the country’s leading investment institution, as the economy draws strength from its sound domestic fundamentals while improving conditions abroad fuels demand for exports.

Given the slow pace of reconstruction work in typhoon-stricken areas and last year’s high base, “we expect gross domestic product (GDP) growth in the first quarter to slow down further to 6 percent,” FMIC said in a report Tuesday.

In the fourth quarter of last year, the economy’s rate of growth was recorded at 6.5 percent—the slowest for the year. But the economy still grew by 7.2 percent for the entire year—the fastest among all major Southeast Asian economies.

Several leading indicators pointed to the easing of growth in the three months ending in March, FMIC said. Among these were electricity sales, which grew by just 1.3 percent in January and February, and manufacturing output, which grew by a single digit rate after a semester of growth in the double digits.

Growth in combined tax and customs collections also slowed to around 10 percent year-on-year, FMIC said, noting that this was 4 percentage points slower than last year’s average.

“A strong rebound should commence in the second quarter, when reconstruction starts in earnest,” FMIC reported.

The firm said this would enable the economy to still post another GDP growth rate of over 7 in 2014.

Data on the country’s economic performance for the period are due by the end of this month.