Japanese financial holdings firm Nomura kept its 2017 growth forecast for the Philippines at 6.7 percent, saying economic expansion is expected to accelerate in the second half from the 6.4-percent growth in the first semester.
Nomura said in a report over the weekend the gross domestic product growth would likely reach 6.9 percent in July to December, faster than the 6.4-percent in expansion in January to June.
“We reiterate our 2017 GDP growth forecast of 6.7 percent, implying a pickup in growth to 6.9 percent in the second half from 6.4 percent in the first half. We continue to expect government spending to accelerate given the administration’s strong push to implement public sector infrastructure projects and avoid past problems of underspending,” Nomura said.
“More progress on infrastructure projects should continue to crowd in private investment. Buoyant sentiment, resilient remittances, low inflation and falling unemployment should also support a further pickup in household consumption,” it said.
Second-quarter growth slightly picked up to 6.5 percent from 6.4 percent in the first quarter, on the sustained strength of the industry sector and marked recovery of the agriculture sector.
This brought the first semester GDP growth to 6.45 percent, near the lower end of the Duterte administration’s target range of 6.5 percent to 7.5 percent this year.
Nomura said on quarter-on-quarter seasonally adjusted basis, the economy experienced a more significant pickup in momentum, accelerating to 1.7 percent in the second quarter from 1.3 percent in the first quarter.
“This validates our view that the slowdown in the first quarter was unsustainable… In particular, private consumption growth edged higher to 5.9 percent y-o-y from 5.8 percent, driven by spending on food and utilities, while non-discretionary durables, particularly transport, also grew faster, “ it said.
“Government spending picked up more sharply, reflecting a reversal of unfavorable base effects from the previous quarter owing to last year’s elections, as we expected, but also the administration’s efforts to improve disbursements,” it said. Julito G. Rada
The Philippine economy grew 6.9 percent in 2016, driven by higher fiscal spending, robust domestic demand and investments.