Oct-Dec GDP growth seen higher than Q3 level

THE ECONOMY likely grew faster in the fourth quarter of 2014 than the preceding quarter, but the  full-year figure possibly fell short of the government’s goal mainly due to anemic public spending, a poll among economists showed.

Ahead of the government’s announcement of the official figures on Jan. 29, all of the economists polled by the Inquirer last week predicted a fourth quarter gross domestic product (GDP) growth that was higher than the disappointing 5.3 percent in the third quarter.

For DBS Bank Ltd. economist Gundy Cahyadi, the fourth quarter GDP likely grew by 6.2 percent, while ING Bank Manila senior economist Joey Cuyegkeng’s forecast was 5.9 percent, as the “stronger than expected fourth quarter agriculture performance delivers some upside surprise.”

The agriculture sector was among the hardest hit by super-typhoon “Yolanda” when it flattened central Philippines in November 2013. This pulled down the fourth quarter GDP growth that year to 6.5 percent, the lowest quarterly growth recorded in 2013.

Ateneo de Manila University economics department chair Luis F. Dumlao told reporters last week that the October to December growth figure could have settled at 5.9 percent, while University of Asia and the Pacific (UA&P) professor Victor A. Abola said his fourth quarter GDP forecast was a high 6.8 percent “based on good agriculture performance, robust manufacturing and construction, which includes at least three PPP [public-private partnership] projects that are going full blast.”

University of the Philippines-School of Economics professor Ernesto M. Pernia, meanwhile, said he expected the fourth quarter GDP growth at 6 to 6.2 percent “owing to higher government spending, better export performance, and higher consumption spending in the run-up to the holiday season, especially with lower fuel prices and inflation.”

The fourth quarter growth forecasts of Security Bank economist Patrick M. Ella, British banking and financial giant Barclays, as well as Moody’s Analytics were all above 6 percent—at 6.6 percent, 6.3 percent and 6.1 percent, respectively.

“With exports improving in November-December amid stable domestic demand, we expect growth to improve in the fourth quarter,” Barclays said last Friday.

For its part, Moody’s said it was expecting a “rebound” in the fourth quarter as “business sentiment and investments remain buoyant and should make a solid contribution to growth.”

For the entire 2014, only one economist—UA&P’s Bernardo M. Villegas—projected a full-year GDP growth within the government’s target. Villegas, who is also known as the country’s “prophet of boom” told an Asia CEO Forum last Jan. 13 that the 2014 GDP could have grown by 6.5 percent. The government’s goal is 6.5-7.5 percent.

Abola and Ella, meanwhile, projected that the 2014 GDP could have expanded by 6 percent and 6.2 percent, respectively. According to Abola, “lower inflation, last-minute spending in December and the [rollout of] PPP projects should provide the added boost” to last year’s GDP.

Economic managers had said that the “realistic” GDP growth last year would be 6 to 7 percent, a range whose lower end was below the official goal.

The majority of economists who provided their 2014 GDP growth forecasts had figures below 6 percent.

Cayadi and Dumlao both projected the economy to have grown by 5.9 percent last year, while Cuyegkeng and Pernia’s projections were even lower at 5.8 percent.

For Pernia, the lower full-year GDP for 2014 was a result of “slower-than-projected growth in earlier quarters, especially the first and third quarters.”
Last year’s first quarter GDP grew by only 5.7 percent due to the spillover effects of “Yolanda.”