Q3 economic growth seen above 6%

Faster government spending was expected to have had boosted economic growth in the third quarter such that all economists polled by the Inquirer last week saw gross domestic product (GDP) expansion above the dismal first-half average of 5.5 percent.

The government will report on the country’s economic performance on Thursday, Nov. 7.

Of the 11 economists who shared their forecasts to the Inquirer, six projected third-quarter growth at 6 percent and above.

The highest projection was 6.3 percent by ING Bank Manila’s Nicholas Antonio T. Mapa and Rizal Commercial Banking Corp.’s Michael L. Ricafort.

Mapa partly attributed his forecast to base effects, noting that “the third quarter of 2018 saw GDP post the lowest growth print last year at 6 percent” even as “household final consumption [would] deliver a sizeable contribution to growth, due largely to the fact that inflation has plunged to less than 1 percent in September, which should help entice an accelerated pace of holiday spending.”

For his part, Ricafort noted the increase in government spending (39-percent year-on-year increase in September), especially on infrastructure as the government’s catch-up spending for the rest of 2019 was finally taking place.

To recall, the economic team unveiled a “bold” disbursements catch-up plan after economic growth slowed due to underspending at the start of the year due to the delayed approval of the P3.7-trillion 2019 national budget.

Capital Economics’ Alex Holmes projected 6.2-percent growth in the third quarter, while Bank of the Philippine Islands’ Emilio S. Neri Jr., BDO Unibank Inc.’s Jonathan L. Ravelas and University of Asia and the Pacific’s Victor A. Abola shared the same forecast of 6 percent.

ANZ Research’s Mustafa Arif and Moody’s Analytics’ Katrina Ell projected 5.9-percent third-quarter GDP growth as strong cash remittances from Filipinos abroad supported private consumption.

Philippine National Bank’s Francisco G. Trinidad Jr. and Security Bank’s Robert Dan J. Roces both see 5.8-percent growth.

Roces said: “Leading indicators suggest an otherwise unremarkable recovery for the quarter as sluggish growth in capital goods, slowing imports sector offset gains from higher household consumption on the back of slower inflation, and a late surge in public spending seeking to play catch-up after getting derailed by the late budget. Private investments which plunged in the second quarter could be a source of weakness due to external uncertainties.”

The lowest forecast in the Inquirer’s poll came from Ateneo de Manila University’s Alvin P. Ang, at 5.7 percent.

“We still see lower investment growth due to the global and local environments,” Ang said.