’17 GDP growth seen at 6.7%

Economic growth likely softened during the fourth quarter of last year following a better-than-expected expansion in the third quarter, bringing the full-year 2017 average below the rate posted in 2016, according to economists polled by the Inquirer last week.

The average projections showed that the fourth-quarter growth would have settled at 6.7 percent, such that the gross domestic product (GDP) would have grown by an average of 6.7 in 2017, lower than 2016’s annual growth rate of 6.9 percent.

The government will announce the fourth-quarter and full-year 2017 GDP performance tomorrow.

The economy grew by an average of 6.7 percent in the first three quarters of last year.

London-based economic research firm Capital Economic expected a 6.5-percent year-on-year growth during the October-to-December period.

“After a strong outturn in the third quarter, there are signs that growth in the Philippines softened in the fourth quarter. Industrial production weakened in October and November. Meanwhile, export growth tailed off toward the end of last year. At the same time, import growth accelerated, suggesting a larger drag from net trade,” Capital Economics said.

The research arm of Moody’s Corp., meanwhile, saw a 6.7-percent GDP growth in the fourth quarter.

“Domestic demand likely remained the major driver of growth, with exports also providing lift, thanks to strong demand for electronics and components. Consumer spending likely remained firm as households benefited from steady inflows of overseas worker remittances and a healthy labor market. Investment also likely stayed solid on the back of government-led infrastructure projects,” Moody’s Analytics said.

“The Duterte administration plans to spend P8-9 trillion on infrastructure to 2022. Those plans got a boost late last year with the passage of the first tax reform bill, as it will help fund the ambitious infrastructure plans,” it noted.

Land Bank of the Philippines market economist Guian Angelo S. Dumalagan said economic expansion likely slowed to 6.4 percent during the fourth quarter as the surge in imports and the slowdown in exports intensified the negative contribution of net trade to the country’s GDP.

“Moreover, the annual growth of consumer spending likely decelerated, despite higher government spending on infrastructure,” bringing the full-year average to 6.6 percent, Dumalagan added.

IHS Markit Asia-Pacific chief economist Rajiv Biswas’ fourth-quarter forecast was 6.7 percent, “reflecting robust growth in consumer spending as well as strong growth in construction and exports, albeit mitigated by the impact of rapid growth in imports.”

For the entire 2017, Biswas projected 6.7 percent, “with overall growth momentum underpinned by rapid growth in consumption expenditure, investment and exports.”

“The Philippines’ growth remains robust, likely printing 6.7 percent year-on-year in the fourth quarter for a full-year rise of 6.7 percent in 2017. Although the momentum in industrial production has been easing, the rise in government spending should have provided a significant offset. Several infrastructure projects broke ground in the last quarter, raising employment opportunities,” ANZ Research economist for South and Southeast Asia Eugenia F. Victorino said.