PH economy likely grew further in Q1, says BSP

Economic growth likely stayed healthy in the first quarter of the year as stable prices boosted Filipino consumers’ purchasing power.

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said ongoing infrastructure projects as well as higher state spending ahead of the 2016 polls would also drive domestic output.

“Private demand will continue to be strong, aided mainly by sustained remittance inflows and low inflation,” Tetangco said in an email.

“Planned infrastructure spending and additional government expenses for the upcoming 2016 election should also provide an additional boost to the local economy,” he told reporters.

Earlier, the International Monetary Fund (IMF) said gross domestic product (GDP) growth likely slowed down from the 6.9-percent expansion in October to December of last year.

For the current year, Tetangco said the central bank “shares” the national government’s growth target of 7 to 8 percent. Last year, economic activity rose by 6.1 percent. GDP data for the first quarter will be released at the end of May.

Apart from strong infrastructure and consumer spending, capital investments will also remain strong this year, driven by the real estate sector, Tetangco said. Capital formation refers to new buildings, factory equipment, and the like that lead to the creation of more jobs.

“Capital formation should also contribute to economic growth with construction and investments in durable equipment expected to remain strong,” he said.

In a recent report, the IMF said the Philippines would remain among the strongest performers in the Asia Pacific region, which in turn would lead the global economy in terms of growth.

This year, the IMF expects the Philippine economy to expand by 6.7 percent. This is better than the IMF’s previous forecast of a 6.3-percent growth for 2015.

The multilateral lender said inflation was projected to remain in the lower end of the central bank’s target range of 2 to 4 percent, reflecting lower commodity prices.

To ensure the country stays on its current track, the IMF said the government should focus on structural reforms that lead to higher tax revenues. This would allow the state to raise spending on infrastructure, education, healthcare and other key areas, which would in turn encourage private sector investments.