PH on track to meet 2017 GDP growth target

Andrew Cummings
May 18, 2017

The Philippine economy grew at its slowest pace in more than a year in the first quarter on weaker government spending, but strong exports and domestic consumption suggest the Asean country remains poised to raise rates this year.

"Our Q1 performance bodes well for the economy because it is broadly in line with the 6.5-7.5 pct target for this year", Ernesto Pernia told a news conference.

"We are only second to China's growth of 6.9 percent, while India's number hasn't come out yet", he said.

Based on the National Economic and Development's presentation, there is a downward trend in terms of gross domestic product (GDP) growth during the post-election period.

Preliminary data from the Philippine Statistics Authority (PSA) showed that growth in economic output - as measured by gross domestic product (GDP) - slowed from the 6.6% posted in the preceding quarter and from 6.9% logged during the same period previous year.

Mr Pernia said the slowdown could be explained by the absence of election spending, which boosted growth a year earlier. This was followed by the industry sector, which decelerated to 6.1 percent as compared with the 9.3 percent recorded in the first quarter of 2016.

"With the steady unfolding of the Build Build Build program in the coming months, we expect construction activities and public spending to pick up sharply, consistent with the government's aim to spend 5.3 percent of GDP this year for infrastructure and up to 7.4 percent by 2022", Pernia said.

The country overtook Vietnam and Indonesia, which both grew 5.1 percent, and Thailand which rose 3.3 percent.

Exports of goods also grew by 22.3 percent, the fastest rate since the third quarter of 2010, Pernia noted.

He said he expects the economy to maintain its growth momentum with the recovery of external trade and higher business optimism.

The rise in inflation must also be contained at a manageable level to keep consumption robust, said Pernia. Cuyegkeng predicted that government spending would recover in the second half.

"GDP expansion in the year's first three months illustrates that growth remains steady and could gain momentum for the rest of the year", said Dominguez, "partly as a result of this Administration's "Dutertenomics" strategy to stimulate economic activity and achieve financial inclusion for all Filipinos in the long haul via an aggressive expenditure program on infrastructure, human capital formation and social protection". "We are reviewing our full-year forecast of 6.3 percent for a possible upward revision", Cuyegkeng said.

Personal consumption, which accounted for almost 60% of the economy, rose at a slower 5.7% clip in the January to March period from 6.2% in the fourth quarter and from 7.1% a year ago.

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