6% GDP growth in 2015 seen still likely

Economic growth is expected to improve steadily in the second half of the year as the government hikes spending, and as investments and consumption stay strong.

Singapore’s DBS bank said gross domestic product (GDP) growth might still reach 6 percent for the entire year, matching last year’s 6.1 percent.

This still falls short of the government’s target range of 7 to 8 percent.

“Domestic demand continued to support overall GDP growth,” the bank said in a note.

The bank’s projection comes ahead of this week’s release of Philippine GDP numbers. DBS said growth likely improved in the second quarter.

Private consumption growth is likely to remain steady at about 5.5 percent in the second quarter, anchored by strong remittances from overseas Filipino workers (OFW). OFW remittances were up by 5.5 percent in the second quarter and on track to hitting more than $25 billion this year, which will be a new high.

In the meantime, fiscal conditions have improved, the bank said, noting that budget spending grew by 12.4 percent in the second quarter, compared to only 4.5 percent in the previous period.

The bank said overall private sector sentiment remained rather firm while the scale of public spending was still supportive. Investment growth is likely to remain at about 10 percent in the second quarter.

Weak global demand, according to • the note, will likely be the biggest threat to the economy.

“Further disappointment in the export growth figures is not to be ruled out,” the bank said.
In the first quarter, growth would have reached 6 percent, higher than the actual 5.2 percent, if demand for exports had not collapsed.

The bank said the export sector had shown some signs of improvement, with shipments of electronics products in the second quarter growing by 5.2 percent, up from 2.7 percent in January to March.
Unless fiscal expenditure collapses again in the second half, overall GDP growth may still reach 6 percent for the full year, the bank said.