Q1 GDP growth seen at 4.3%

The Philippine economy may have grown by 4.3 percent in the first quarter amid improvements in exports, inflows of remittances and government expenditure, according to the DBS Group.

The financial service provider said in a research note that the country’s gross domestic product was expected to show “a solid growth number” for January to March as high-frequency indicators pointed to a rebound in economic activity.

For one, DBS noted that a sharp rebound in electronics exports in the first quarter drove an 18.6-percent growth in total exports from 5.2 percent a year ago.

“On the domestic front, a robust pace of credit growth and stable remittance inflows should help support domestic consumer spending,” it said.

The Bangko Sentral ng Pilipinas said earlier this month that remittances from overseas Filipinos grew by 5.4 percent in the first quarter to $4.8 billion.

“Government spending also rose by 13.1 percent (in the first quarter compared with the fourth quarter of 2011), indicating that progress has been made toward overcoming underspending in the last few quarters due to bottlenecks and more stringent budget disbursement measures,” DBS added.

“These numbers suggest that growth will get off on a strong note in 2012,” the group said.

However, DBS said the outlook for the remaining quarters “has turned decidedly cloudier.”

“To be sure, trade numbers across the region have already softened in April and financial market turbulence over the last few weeks—on fears of a larger-than-expected slowdown in China and policy directions for the eurozone—will do little for the Philippines’ export outlook,” DBS said.

“As such, we are maintaining our GDP growth forecast for this year at 4.2 percent, noting that the upside risks from a strong first quarter will be balanced by downside risks in the subsequent quarters,” it added.

The Singapore-based firm said domestic demand would be crucial in cushioning the impact of the slowdown in global demand on Philippine exports.