Forecasts point to firmer growth in Q2

Economic growth improved in the second quarter of the year on the back of stronger government spending and a recovery in the manufacturing sector, analysts said this week.

However, the economy likely performed slower than its average over the past five quarters due to the lingering effects of Supertyphoon “Yolanda” and delays in the implementation of the state’s expensive reconstruction program in the Visayas.

Nearly all analysts polled by the Inquirer this week were unanimous in saying that growth in the second quarter was better than the January to March period of the year, when the economy expanded by a disappointing 5.7 percent.

Forecasts of nine banks ranged from 5.5 percent (Singapore’s DBS) to 6.7 percent (Barclays). All were slower than the economy’s average growth of 6.9 percent over the last five quarters ending in March.

“It’s still very strong growth. You can’t grow by 7 percent forever,” BPI’s Emilio Neri Jr. on Tuesday said in an interview. The bank sees growth of 5.9 percent, which according to Neri is “still a healthy number” that indicates “continuing momentum” for the economy.

The government is scheduled to release on Thursday data on the country’s economic performance in the second quarter. This year, the state wants to drive growth to between 6.5 and 7.5 percent from last year’s 7.2 percent.

In a report released on Tuesday, First Metro Investments, an investment bank, said clearer signs of recovery emerged in the second quarter. With more detailed plans for the implementation of the government’s reconstruction plan, the firm said it was “quite confident” that growth would return to 7 percent in the second half.

The bank cited higher government spending in June, factory output, and exports as encouraging signs of faster growth in the three-month period.

Gil Beltran, the Finance department’s chief economist, earlier said manufacturing growth in the second quarter—clocked in at 13 percent—likely boosted growth to 7 percent.