The Philippine economy likely grew by over 7 percent in the second quarter, faster than the 6.9-percent expansion in the first quarter, Nomura Securities Co. Ltd. said in a report.
“Following the impressive 6.9-percent economic growth in the first quarter, Nomura expects growth of the Philippines to accelerate in the second quarter to above 7 percent and to settle at an average of 6.5 percent for the full year to become one of the fastest growing in Asia,” Euben Paracuelles, executive director and economist of Nomura, said.
“This [2016 growth projection] is not all about election-related spending: the quality of growth continues to improve with larger contributions from investment spending,” Paracuelles said.
He said whether this could be sustained in the rest of the year would depend in large part on the new administration’s economic agenda.
Paracuelles said Nomura’s baseline view remained that President-elect Duterte’s policy approach would be pragmatic and would unlikely reverse the reform progress made in the last few years.
“As a result, we are optimistic that the medium-term growth outlooks will stay solid,” Paracuelles said.
The report was contained in the latest issue of EconomyPH, the bi-monthly economic newsletter from the Investor Relations Office of Bangko Sentral ng Pilipinas.
Meanwhile, Rizki Fajar, vice president and economist of RHB Securities Indonesia, said the Philippines was on track to maintain a solid growth in 2016.
“The Philippines’ economy remains on track to sustain its growth trajectory in 2016, on the back of robust household consumption coupled with efforts to accelerate infrastructure spending and ample fiscal space to stimulate government spending. As a whole, the economy will likely continue to hold up and we envisage it to grow by 6 percent in 2016, compared with 5.8 percent in 2015,” she said.
Fajar said the Philippines was expected to continue enjoying a manageable inflation environment and a relatively stable exchange rate.
“The expected widening current account surplus in 2016 should provide an underlying support to the peso in 2016. Elsewhere, inflation will likely remain subdued and manageable, which in turn will not warrant additional stimulus from monetary policy and the policy rate will likely remain stable in 2016,” Fajar said.
She said under the assumption of no sudden change in main policies, RHB Securities Indonesia expected the Philippine economy to continue to grow higher as private investment started to recover.
DBS Bank of Singapore kept its growth forecast for the Philippines this year at 6.3 percent on possible moderation in private sector investment that could offset the increase in spending of the Duterte administration.
President Rodrigo Duterte earlier said his administration would increase fiscal spending, especially for infrastructure projects, to sustain the growth of the economy.
The new administration reduced the GDP forecast this year to a ranger of 6 percent to 7 percent from the previous administration’s target of 6.8 percent to 7.8 percent. For 2017, GDP is seen settling between 6.5 percent and 7.5 percent, also lower than the previous target of 6.6 percent to 7.6 percent.
Budget Secretary Benjamin Diokno said among the factors that could affect economic expansion this year were the tapering of the effects of election spending, slow agricultural output due to El Niño dry spell, weak infrastructure activities due to seasonality and weak external trade.