Experts see slower GDP growth in Q3

Most banks and economists believed that the country’s gross domestic product (GDP) in the third quarter grew by at least 6 percent—slower than the 7-percent expansion posted in the same period last year, mainly due to slower government spending.

The experts were polled ahead of the government’s announcement on Thursday of the third quarter economic performance.

But Socioeconomic and Planning Secretary Arsenio M. Balisacan Tuesday told reporters that, while underspending could have adversely affected the third quarter GDP, the early part of next year would see a faster disbursement of government funds.

“There’s that possibility that underspending would impact on third quarter growth, but I’m not worried about the shortage in spending in one particular quarter, as long as you can make it up in subsequent quarters,” said Balisacan, who is also the director general of the National Economic and Development Authority (Neda).

Government spending is expected to be “quite robust” in the first two quarters of next year with the acceleration of disbursements for the rehabilitation of areas affected by Supertyphoon “Yolanda” late last year, the Neda chief said in an interview.

Balisacan declined to provide his own third quarter GDP projection ahead of Thursday’s announcement.

Last October, Balisacan said, the economy could have grown faster in the third quarter than the first half GDP growth rate of 6 percent.

But banks and economists were not as bullish as Balisacan.

“GDP growth for the third quarter is likely to be more moderate than the third quarter of 2013 pace of economic activity. Underspending of government is one cause of slower growth. Weak agriculture performance in the third quarter is another. Growth of overseas Filipino workers’ remittances, manufacturing indices and exports are weaker than the third quarter of 2013’s performance,” ING Bank senior economist Joey Cuyegkeng Tuesday said.

As a result, Cuyegkeng said, ING expects “a slightly slower growth of 6.3 percent” during the third quarter.

Pauline E. Revillas of Metropolitan Bank and Trust Company’s research department meanwhile said in a separate e-mail that the bank’s third quarter forecast is at 6.1 percent, “with an upside bias, on solid consumption spending and strong exports.”

She said anemic government and investment spending “put downward pressure on GDP growth during the quarter.”

ING and Metrobank’s forecasts are both above 6 percent, which is similar to the earlier projections released by DBS Bank Ltd. (6.9 percent), Barclays (6.5 percent), and investment bank First Metro Investment Corp. (“above 6 percent”).

But for Trinh D. Nguyen, Asia-Pacific economist of Hong Kong and Shanghai Banking Corp. (HSBC) Ltd., the Philippines’ third quarter GDP “is expected to slow to 5.7 percent year-on-year.

Since remittances rose by 6.5 percent year-on-year in the third quarter, supporting spending, “we expect private consumption to accelerate … Government spending, however, contracted by minus 1.8 percent year-on-year in the third quarter, likely dragging down the growth momentum,” Nguyen said in an e-mail.

“With capital goods imports declining, we expect investment to be sluggish; as such, despite strong private spending and better net exports, GDP is expected to decelerate,” the HSBC economist added.

Also, Moody’s Analytics earlier projected a third quarter GDP of below 6 percent. The credit rater last week said the country could have grown by only 5.9 percent during the July to September period. Ben O. de Vera