ING estimates PH GDP growth in Q4 2015 at 6%

Dutch financial giant ING expects the Philippine economy to have expanded by “at least 6 percent” during the fourth quarter of last year, below the 6.9-percent growth needed to hit the “realistic” full-year target of 6 percent.

In a statement on Tuesday, ING Bank Manila also said it had raised its inflation forecast for 2016 to 2 percent from 1.7 percent on the back of expected price pressures on food as a result of the dry spell due to El Niño.

“As supply chains improve from the impact of typhoons in the fourth quarter of 2015, the impact of El Niño could be felt especially in prices of other food stuffs. But we expect the BSP (Bangko Sentral ng Pilipinas) to shift to a tightening bias in late second quarter or in the third quarter and believe that BSP may hike key policy rate by 50 basis points to ensure inflation in 2017 and 2018 remain within target range and to coincidentally offset Fed rate hikes and maintain a reasonable interest rate differential,” ING Bank senior economist Joey Cuyegkeng said.

The BSP had kept the inflation range target for 2016 at 2-4 percent.

As for government spending, Cuyegkeng said fiscal spending as of end-November last year “remained favorable.”

These double-digit jumps in expenditures on public goods and services would have expanded the economy in the last quarter of 2015 faster than the average of 5.6 percent during the first three quarters.

The government’s full-year GDP growth target for 2015 is 7 to 8 percent, but economic managers had conceded that the economy could only expand by a “realistic” 6 to 6.5 percent.
For 2016, “domestic demand is likely to remain strong not only because of government spending but also strong private sector spending growth, favorable construction activity as well as steadily growing service sector,” Cuyegkeng said. Ben O. de Vera