The econonomy was estimated to have grown at a faster rate of more than 5 percent in the third quarter due to a pickup in construction activities as well as government spending.
This was the projection made by First Metro Investments Corp. (FMIC) and the University of Asia and the Pacific (UA&P) in their latest joint monthly publication “The Market Call.” The two institutions said prospects for growth were better in the third than in the first two quarters of the year as public spending accelerated.
“Given the strength of the industrial sector, despite weak electronics exports, the continuing upsurge in residential construction and higher [national government] spending in Q3, we expect a better than 5-percent growth in the third quarter,” FMIC and UA&P said in the publication.
The economy, measured in terms of the gross domestic product, grew 4.6 percent in the first quarter and 3.4 percent in the second quarter. This placed the average growth for the first half at only 4 percent, which kept the economy off the 5- to 6-percent growth target for the full year.
FMIC and UA&P said there was still a chance for the economy to achieve the target, given that growth could have been above 5 percent in the third quarter and that prospects for the fourth quarter were also favorable.
The rise in construction activities was partly due to rising demand for residential properties. This demand is being supported by the sustained rise in remittances from overseas Filipinos who allocate a portion of their savings for real properties.
The increase in construction activities is reflected in the rise in bank loans tapped by the construction sector to help finance housing development.
According to documents from the Bangko Sentral ng Pilipinas, outstanding bank loans for the construction sector amounted to P33.19 billion as of end-August this year, rising 22 percent from P27.13 billion as of the same period last year.
FMIC and UA&P said a pickup in domestic demand would help offset the drag caused by anemic exports. The country’s export sector has been facing sluggish demand especially since the large exports markets, particularly the United States and Europe, were having difficulty recovering firmly from the latest global turmoil.
Global demand for electronics, the Philippines’ major export product, has been weak this year. Economists said that in times of economic crunch, people tend to focus spending on basic goods and spend less on non-essentials such as electronics.
FMIC and UA&P said the government’s pronouncement of faster spending in the third quarter would have also aided in the economy’s faster growth.
The government spent less than programmed in the first half, with the budget department saying this was due to efforts to scrutinize spending proposals by line agencies. Budget officials said, however, that public spending has picked up since the start of the second half.