PH economy poised to beat growth target for ’13

The Philippines again may beat the economic growth target set for 2013 as inflation is expected to be more moderate than earlier anticipated.

According to the July issue of The Market Call, the latest estimates on gross domestic product (GDP) and inflation point to another banner year for the Philippine economy.

The economy is estimated to have grown by at least 7.5 percent in the second quarter, bringing the average for the first semester to 7.6 percent, analysts of the publication said.

The official growth target for this year has been set between 6 and 7 percent.

“The manufacturing sector should combine with the construction and mining sectors to lead GDP growth in the second quarter to 7.5 percent or higher. Employment figures should improve in the second half as the growth momentum in manufacturing gains traction,” said The Market Call, a monthly publication of First Metro Investments Corp. and the University of Asia and the Pacific.

The publication likewise expects the rate of rise in consumer prices to be very moderate due to favorable farm output.

Inflation will likely settle at 2.7 percent in the third quarter, thus bringing the average for the first nine months of the year to 2.8 percent, it said.

The government expects inflation to range between 3 and 5 percent this year.

“Despite the sharp decline in the peso, our inflation outlook also remains positive. Water rates in Metro Manila are expected to be lower in the second half and, together with good rice harvest, this should easily offset much of the impact of the peso’s depreciation on inflation,” the publication  said.

The Philippines last year and in the first quarter of 2013 surprised the world when it registered robust growth rates, even with a fragile global economy.

The economy grew by 6.8 percent last year, and 7.8 percent in the first quarter of 2013, which was considered to be the fastest in Asia.

The sharp economic growth rates had elicited concerns of potential overheating.

However, government officials believe that the Philippines may sustain the favorable combination of high growth rate and modest inflation.

The Bangko Sentral ng Pilipinas earlier said that unlike before, when consumption was the main growth driver, the economy now also benefits from the significant rise in local investments.

As such, the BSP said, fast growth rates may be sustained without causing inflation to shoot up.

Officials said rising investments help in boosting supply of goods and services. This, in turn, helps temper the rate of rise in consumer prices.