The Philippine economy still has the potential to grow 7 percent this year, despite the lackluster performance in the first quarter, economists from First Metro Investment Corp. and University of Asia & the Pacific said in a joint report Monday.
The economists said in the June issue of Market Call capital markets research report that the recovery of consumer spending, public construction and sustained strength of remittances in the remaining months of 2017 would help achieve the 7-percent growth target.
The economists said the gross domestic product could have grown 7 percent in the first quarter, if not for the slowdown in construction and the impact of former Environment Secretary Regina Lopez’s anti-mining initiatives.
First-quarter GDP growth settled at 6.4 percent, slower than 6.8 percent a year ago and 6.6 percent in the fourth quarter of 2016.
“While the 6.4 percent GDP growth in Q1 disappointed investors mildly, they could be explained by the effect of the former DENR Secretary Gina Lopez’s anti-mining initiatives [-0.2 percent total impact], construction slowdown especially infrastructure spending [another -0.2 percent], and electricity-water-gas weak 1.7 percent gain [a final -0.2 percent deduction],” they said.
“In short, GDP growth could have been 7 percent. But although it didn’t happen in Q1, we still expect a very strong [and lower base] second half to offset the H1 “weakness” and still reach 7 percent growth for the full year 2017,” they said.
Lopez sought to shut down 28 of the nation’s 40 mines and cancel the contracts of dozens of others, a move countered by the government’s economic managers because of its impact on revenue generation and national economy.
The report said that with remittances up by double digit, and the industry sector continuing to perk up, consumer spending should recover from a disappointing first quarter and clock closer to 6.5 percent in the second quarter.
Latest data from Bangko Sentral showed that cash remittances in the first four months reached $9.036 billion, up 4.2 percent from $8.670 billion in the same four-month period a year ago. Remittances this year is projected to rise 4 percent to $28 billion from $26.9 billion posted in 2016.
“With capital goods imports shooting up by 25 percent in March and industrial production in double-digit expansion also in March, we expect public construction [on infrastructure] to regain its double-digit growth pace starting Q2, so that domestic demand should be more robust for the next quarter,” the economists said.