Second-quarter GDP growth seen at 7.5%

The Philippines, Asia’s fastest-growing economy in the first quarter, likely sustained a brisk growth pace of at least 7.5 percent year-on-year in the second quarter.

This forecast was based on the July issue of “The Market Call,” a joint publication of investment house First Metro Investment Corp. and the University of Asia and the Pacific (UA&P).

In the first quarter, the Philippine grew its gross domestic product (GDP) by 7.8 percent, outpacing China as the region’s fastest-growing economy. In the second quarter, China grew 7.5 percent.

“Our positive outlook for the second quarter and for the rest of the year remains intact,” the research said, noting that despite another fall in exports, the economy remained driven by domestic demand, with the construction and manufacturing sectors leading the way.

“A further booster for the domestic economy is the peso’s sharp depreciation in June, a collateral damage inflicted by the strong outflow of investible funds from emerging markets and to the US dollar. The basis for this added impulse is in our previous studies, which indicates that for every peso of OFW (overseas Filipino worker) spending, P2.50 of income is generated in the economy,” the research said.

With Meralco electricity sales growth in second quarter widely out-stripping the pace in the first quarter, the research said the manufacturing sector should positively combine with construction and the mining sectors to lead second-quarter growth to 7.5 percent or higher.

Exports are also seen to recover slightly in the second half on the back of a more robust US economic recovery, but the research said it would likely be barely positive for the whole year. “Since the recent economic growth has been domestic demand-driven, exports will have a minimal impact on the growth trajectory,” it said.

The FMIC-UA&P research also cited the Bangko Sentral ng Pilipinas’ confidence in keeping growth robust with inflation in check as the central bank maintained policy key and special deposit account rates unchanged during its last meeting.