Faster GDP growth expected in Q2

The jump in government spending on public goods and services likely pushed second-quarter gross domestic product (GDP) growth faster than the first three months’ expansion, according to economists polled by the Inquirer.

Moody’s Analytics was the most bullish with a forecast of 6.8 percent year-on-year GDP growth in the second quarter.

“The main boost will come from exports, which have been expanding rapidly in recent months largely because of stronger shipments of electronics,” the research arm of Moody’s Corp. said in a report.

First-half merchandise exports jumped 13.6 percent year-on-year to $31.04 billion, government data showed.

“Meanwhile, domestic factors have remained conducive to strong growth. Private consumption will grow rapidly for the foreseeable future thanks to rising incomes and favorable demographics. Investments will also expand rapidly as a result of a mixture of private and government projects,” it added.
The government will announce the country’s second-quarter economic performance on Aug. 17.

The GDP grew by a lower-than-expected 6.4 percent in the first quarter, which was blamed on slower government spending, higher prices of consumer goods and the dissipated impact of election-related expenditures last year.

Land Bank of the Philippines market economist Guian Angelo S. Dumalagan said “the economy likely expanded by 6.7 percent in the second quarter, driven by higher government spending.”

Government expenditures in the second quarter jumped 13.6 percent year-on-year to P715.5 billion, faster than the 4-percent rise in the first quarter.
“Among the major sectors, agriculture likely accelerated together with services as good weather conditions possibly contributed to stronger growth in farm output,” Dumalagan said.

Metrobank research analyst Pauline May Ann E. Revillas expects the GDP to have expanded by 6.5 percent from April to June “driven mainly by still solid consumption spending, pickup in government spending (from the previous quarter), and lesser trade drag due to the improvement in exports performance.”

Euben Paracuelles, economist at Japanese financial giant Nomura, also projected 6.5-percent growth in the second quarter.

In a report, London-based economic research firm Capital Economics said “recent monthly data for the Philippines has been broadly positive, and we have penciled in another quarter of strong growth in the second quarter” of 6.5 percent.

The forecast of Rajiv Biswas, Asia-Pacific chief economist at IHS Markit, was 6.4 percent on the back of “continued strong growth in domestic demand.”

“Exports have also shown rapid growth in the second quarter, although the net impact on GDP will be dampened by the buoyant expansion of imports due to the strength of domestic demand,” Biswas said. Imports grew 9.6 percent to $44.22 billion in the first half.

DBS Bank Ltd. economist Gundy Cahyadi’s projection was a slower 6.2-percent growth even as he noted that “going by the government’s monthly budget expenditure, it is clear to us that government spending has accelerated.”

The lowest growth forecast was that of Credit Suisse research analyst Michael Wan, at 5.8 percent.

“Most of the consumption-related indicators that we track, such as consumer goods imports, industrial production, manufacturing sales and also motor vehicle sales have all moderated in the second quarter. We also saw extremely weak export numbers, especially for June, which came in at 0.8-percent [growth] year-on-year,” Wan said.