Q1 economic growth seen at more than 7%

The Philippine economy likely grew by more than 7 percent in the first quarter—the fastest expansion in 10 quarters—on the back of robust government spending on public goods and services, according to First Metro Investment Corp. (FMIC).

Also, according to the United Nations Economic and Social Commission for Asia and the Pacific (Unescap), full-year growth is expected to rebound to 6 percent this year from 5.8 percent in 2015, largely driven by strong domestic demand.

FMIC said in the latest The Market Call, a joint report with the University of Asia and the Pacific, that the gross domestic product “should easily have expanded by more than 7 percent in the first quarter, despite a possible 5-percent decline in agriculture due to the  El Niño drought.”

FMIC said three strong indicators support this. First, Meralco electricity sales growth in January and February hit double digits at 12.3 percent and 11.6 percent, respectively.

Second is a 34-percent surge in manufacturing output in January, and third is an 80-percent jump in capital goods importation, which accounted for 38 percent of total imports in the same month.

“Robust election spending by both the government and the candidates should continue not only through the rest of the first quarter, but up to actual elections in May,” FMIC said. “This should boost employment, consumer and investment spending.”

Based on the Unescap report on its Economic and and Social Survey of Asia and the Pacific 2016, consumer spending would continue to benefit from mild price rises and low jobless rate.

“Strong investment growth is also expected, as private participation in infrastructure increase and FDI (foreign direct investment) inflows strengthen, albeit from a lower base,” the UN agency said.

“However, part of the business investment may be held back in the election year as investors wait to see what the new administration’s poli     cies would be,” the Unescap said.

A first-quarter GDP growth exceeding 7 percent would make it the fastest quarterly growth since the 7 percent posted in the third quarter of 2013.

The government is aiming at a growth rate range of 6.8 percent to 7.8 percent this year.

Finance Undersecretary Gil S. Beltran, who attended Thursday’s Philippine launch of the Unescap report, said the government was confident of overtaking the 2015 growth in an election year.

“Over the past 30 years, election spending has been seen pushing up GDP growth by 0.5 to one percentage point,” Beltran said.