Q3 GDP growth seen at 6.5%

The economy likely grew by 6.5 percent in the third quarter, faster than a year ago but possibly the slowest quarterly growth so far this year, First Metro Investment Corp. said Wednesday.

In its “The Market Call” report for October, the Metrobank Group’s FMIC and the University of Asia and the Pacific also noted that while the new administration had kept the sound macroeconomic policies, President Duterte’s rhetoric was making markets jittery.

“While economic fundamentals remain unchanged, some worry about the negative vibes emanating from the President’s controversial statements, even as his economic managers pursue policies broadly consistent with those of the previous administration’s and improving on them,” the report read.

The report cited gains in employment as well as infrastructure rollout in the first three months of the Duterte administration, which would sustain economic growth.

“Strong job creation, robust capital imports and elevated infrastructure spending propel third-quarter gross domestic product (GDP) expansion at around 6.5 percent,” it said.

The third-quarter growth forecast was slower than the 6.8-percent and 7-percent expansion in the first and second quarter, respectively, although faster than the 6.1 percent GDP growth in the third quarter of 2015.

“Employment numbers in July and the continued high growth in durable goods importation provide much confidence for a strong performance in the third quarter,” the report said.

Data showed that the unemployment rate fell to 5.4 percent in July, the lowest since 2005.

Merchandise imports, meanwhile, jumped 12.2 percent year-on-year to $6.9 billion in August, bringing the end-August total to $52.4 billion, up 14.1 percent year-on-year.

“However, the erratic movements in overseas Filipino workers’ remittances and continued weakness in exports may pull growth closer to 6.5 percent,” according to the report.

The growth in cash remittances slowed to 4.6 percent as of end August, slower than the 6.6 percent increase a year ago.

In August, exports slid for the 17th straight month amid weak global demand.