Early indicators point to strong 2013 growth

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Prospects for the Philippine economy remain bright with several key leading indicators pointing to the likelihood that the expected rapid growth in the first half would be sustained in the coming months.

According to the Bangko Sentral ng Pilipinas (BSP), healthy car sales and higher energy consumption were among the early signs that the economy would continue to outperform its peers in the region.

The Philippine economy grew 7.8 percent in the first quarter, beating even China, the region’s perennial growth driver. Economic Planning Secretary Arsenio Balisacan last month said the economy likely expanded by 7.5 percent in the second quarter.

“There are indications that it might continue to be firm,” said Zeno Abenoja, director of the BSP’s economic research department.

Apart from car and energy sales, Abenoja also said that the composite purchasing managers index (PMI) remained 57.3 points or above the 50-point threshold that was considered healthy.

He said the PMI for the manufacturing, services and the retail industries at the end of June stood at 57.1, 59.8, and 55.5 points, respectively. The only outlier was the PMI for supplier deliveries, which stood at 47.9 points.

The PMI, which is published locally by the Philippine Institute for Supply Management (PISM), is a measure of an industry’s health based on new orders, inventory levels, production, supplier deliveries and the employment environment. A PMI score of more than 50 indicates a month-on-month expansion of an industry, while a score below 50 indicates a contraction.

Abenoja also cited the most recent report by the Chamber of Auto Manufacturers of the Philippines Inc. (Campi), which showed car sales grew by 16.5 percent in the first two months of the second quarter of 2013.

“According to Campi, the performance of the local automotive industry remained strong owing to the continuous robust growth of the economy,” the BSP said.

Energy sales also rose 7.2 percent in the first two months of the second quarter, the BSP said, citing data from Manila Electric Co. (Meralco), the country’s biggest electricity distributor. “According to Meralco, the growth of commercial energy sales was mainly associated with the private services and real estate services sub-sector,” the BSP said.

Despite the expected rapid growth of the economy for the rest of the year, Abenoja said consumer prices would likely stay steady until the end of the year.

“Emerging baseline inflation forecast indicate that headline inflation will fall within target range for 2013 and 2014,” he said.