Philippine economy seen to perform faster in 2nd semester

The Bangko Sentral ng Pilipinas (BSP) expects the economy to expand even faster in the second half, with private investments driving up growth.

According to the BSP, sustained increase in investments by the private sector, together with the usual robust consumption of households, will help accelerate growth of the economy in the second semester.

In the first quarter, the economy, measured in terms of gross domestic product, grew by 4.9 percent. Most projections point to a slightly faster growth in the second quarter.

But for the third and fourth quarters, the central bank said growth could be even faster, allowing it to maintain its 5- to 6-percent full-year growth target.

“Business process outsourcing continues to be a promising employer. In addition, capital formation [through private investments] has really bounced back in the last few quarters,” BSP Deputy Governor Diwa Guinigundo said, expecting the trend to continue.

Capital formation, which grew by 37.6 percent in the first quarter, has been registering double-digit annual growth rates since last year, coming from low, single-digit rates the previous years.

Economists said this was due to renewed activity in the manufacturing sector.

Also, optimism on the country’s growth prospects over the medium term has been bringing in investments, they added.

Remittances are likewise seen to be significant, supporting consumption of goods and services, the BSP official said.

Guinigundo said the previous goal of between 7 to 8 percent economy growth could still be attained perhaps next year.

He said production capacity has already expanded, thanks to investments over the past quarters. As a result, the economy has the potential to sustain a faster rate of growth once capacity is fully utilized.

The Aquino administration originally set a growth target of 7 to 8 percent for this year. However, the economic team was forced to scale down its growth forecast of 5 to 6 percent due to adverse developments abroad, such as the natural disasters in Japan and the political unrest in the Middle East and North Africa.

The disasters in Japan could dampen that country’s demand for Philippine goods, while mounting strife in key oil-producing regions recently pushed global oil prices higher.

“Growth of 7 percent to 8 percent is still possible. The robust growth rate [of 7.6 percent] we experienced last year was not an aberration. The economy’s capacity to grow has really gone up,” Guinigundo said.