An ING Bank NV Manila Branch economist forecasted a 6.3 percent growth in the Philippine economy in the third quarter this year, higher than the 6 percent in the second quarter, due to stronger government spending.
“We may have to see government spending step in to offset a projected slowdown in consumption,” ING Bank NV Manila Branch senior economist Nicholas Mapa said in a report.
This growth projection is lower than the recently cut 6.5-6.9 percent output target, as measured by gross domestic product (GDP).
In the first half this year, the economy grew by 6.3 percent, with the first quarter figure at 6.6 percent and the second quarter at 6 percent.
Mapa said state spending is not expected to disappoint and “appears they are up to the task, posting a 33 percent increase in primary expenditure for the quarter.”
He said investment is also seen to contribute more “even before Buildx3 (Build, Build, Build) kicks into high gear.”
“Double digit expansion in capital goods and raw materials imports points to the continued pace of the nascent Philippine investment led growth cycle,” he said.
On the other hand, the economist projected a lesser boost from household spending, which in the past was a major driver of growth, given the elevated inflation rate and rise of interest rates.
Also, he cited the widening trade gap, which, in turn, is a result of the strong growth of importation given the rising need of the domestic economy, especially with the government’s massive infrastructure program.
Mapa said the trade gap “will be a drag on overall growth as exports remains anemic despite the peso’s weakness.”
He, meanwhile, noted that “imports continue to post robust growth prints with all sub components showing no signs of slowing to fee the growing economy.”
In general, he remains optimistic for an above 6 percent output for the domestic economy. (Joann Villanueva/PNA)