GDP expansion in 1st quarter seen at 6.9%

The gross domestic product (GDP) likely grew by 6.9 percent in the first quarter on the back of sustained robust domestic demand and recovery of the agriculture and export sectors, Budget Secretary Benjamin E. Diokno said.

Noting that his first-quarter forecast was in the neighborhood of the midpoint of the government’s 6.5-7.5 percent GDP growth target for 2017, Diokno said “construction and services were the main growth drivers.

“The agriculture sector has also recovered from its moribund state. On the demand side, personal consumption will be the major driver. Exports have also recovered from its weak state in the past,” Diokno added.

Last week, the government reported that merchandise exports jumped 18.3 percent year-on-year to $15.51 billion as of end-March.

The government will announce the first-quarter economic performance on Thursday. The GDP expanded 6.8 percent in the first quarter of last year and 6.6 percent in the fourth quarter.

Among economists polled by the Inquirer last week, the fastest growth projection for the first three months was ANZ Research Asean economist Eugenia F. Victorino’s 7.2 percent.

“The Philippines’ GDP growth remains robust, rising to 7.2 percent year-on-year in the first quarter on the back of the strong performance in the industrial sector. Private consumption likely maintained its above-trend growth. Likewise, corporate capital expenditure spending is still keeping up. The strength in domestic demand coupled with the improvements in external trade should have boosted sequential growth to 1.8 percent quarter-on-quarter,” Victorino explained.

The forecast of Barclays’ Rahul Bajoria was 7.1-percent growth.

For Moody’s Analytics, the Philippines’ GDP grew 6.9 percent during the January-to-March period. “Domestic demand continues to be the main driver, with private investment and consumption increasing rapidly. Positive demographic factors and rising incomes are supporting consumption. Net exports should also be a positive as merchandise exports have recovered in recent months and service exports continue to perform well,” the research arm of Moody’s Corp said.

London-based economic research firm Capital Economics’ projection was also 6.9 percent partly as “the global environment improved” in the first three months.

“The favorable external environment will likely continue to support growth for the rest of the year. The outlook for domestic economic activity is also pretty positive. Household consumption and private investment should remain buoyant, supported by strong credit growth and low interest rates. What’s more, growth is also likely to be underpinned by increased government spending in areas such as infrastructure,” Capital Economics said.

The forecast of Euben Paracuelles, economist at Japanese financial giant Nomura, was 6.9 percent “as the recent export upcycle only reinforces the continued strength in domestic demand led by investment spending in both the public and private sectors.”