GDP grew above 6% in Q1, economists say

THE ECONOMY likely expanded at a faster pace—a growth rate above 6 percent—during the first quarter compared with a year ago, economists said, mainly on expectations of improved government spending.

The economists polled by the Inquirer last week, as well as a couple of global financial institutions’ research notes, all projected a gross domestic product (GDP) growth rate of 6 percent and higher during the January-to-March period. The economy grew by a dismal 5.6 percent in the first quarter of 2014, mostly as a result of the devastation caused by Supertyphoon “Yolanda” (international name: Haiyan) in late 2013.

The highest first-quarter GDP projection was that of Moody’s Analytics at 7.3 percent, citing that “higher infrastructure investment and government spending, alongside robust domestic demand make the Philippines one of Asia’s strongest performing economies.”

The lowest growth forecast of 6 percent was made by HSBC, pointing to a “substantial drag” in net exports due to weak exports as well as slower investments in construction.

For University of Asia and the Pacific professor Victor A. Abola, the first-quarter GDP grew 6.8 percent, which he said already took into consideration the early effects of the El Niño. Abola added that government spending likely recovered during the first quarter.

ING Bank Manila senior economist Joey Cuyegkeng also projected a 6.8-percent economic growth for the first quarter.

Last year’s GDP growth slowed to 6.1 percent partly due to anemic public spending resulting from judicial challenges to the controversial Disbursement Acceleration Program (DAP) earlier introduced by the Aquino administration to fast-track expenditures funded by government savings.

UP School of economics professor Ernesto M. Pernia agreed that “underspending was remedied” during the first quarter, hence his 6.7-percent growth projection.

Bank of the Philippine Islands lead economist Emilio S. Neri Jr., meanwhile, expected a “robust GDP growth of 6.7 percent in the first quarter, with most sectors accelerating significantly” from a year ago. “Some drag could be felt from the energy trading and exploration sectors but will be partly offset by the strong performance of the transport sector.”

Ateneo de Manila University economics department chair Luis F. Dumlao said the industry sector was expected to take the lead toward a 6.5-percent GDP growth during the first quarter. “The construction sub-sector is expected to drive the industry sector,” he added.

For her part, Pauline E. Revillas of Metrobank’s research department deemed that GDP grew 6.1 percent during the first quarter, “supported by robust consumption spending [which was underpinned by solid remittance flows and benign inflation amid the fall in oil prices], rebound in investment spending [as reflected by the strong car sales in the first quarter], pickup in government spending [as the government frontloads election-related spending], and still strong services sector.”