MANILA: BUSINESS – Economy likely slowed in 2017 – analysts

The economy likely slowed as the year ended, analysts polled by The Manila Times said, capping full-year growth to below the 6.9 percent recorded in 2016.

Estimates for the October-December quarter ranged from 6.4 to 7.1 percent with a 6.6 percent average, unchanged compared to the same period last year and below the third quarter’s revised 7-percent expansion.

Full-year estimates, meanwhile, ranged from 6.6-6.8 percent. The 6.6 percent average falls just above the lower end of the government’s 6.5-7.5 percent target for 2017.

Official fourth-quarter and full-year gross domestic product (GDP) growth data will be announced by the Philippine Statistics Authority tomorrow.

Metropolitan Bank & Trust Co.’s (Metrobank) Marc Bautisa had the most upbeat view, citing factors such as consumer spending and the government’s “Build Build Build” program.

“We expect fourth-quarter GDP to hit 7.1 percent, with full-year GDP to hit 6.8 percent on the back of robust household consumption spending, a pick-up in exports, and the effect of government infra spending translating to improving investment spending as well,” he said.

DBS economist Gundy Cahyadi, meanwhile, forecast Q4 growth of 6.9 percent and a full-year result of 6.7 percent.

Private consumption growth likely bounced back to over 5 percent in fourth quarter, he said, while “total investment growth might have moderated further to 7.1 percent in fourth quarter but would have managed to stay close to double-digit for full-year 2017.”

Moody’s Analytics for its part said the Philippine economy likely grew 6.7 percent in the December quarter after a 6.5-percent lift in the prior three quarters.

Domestic demand likely remained the major driver of growth, with exports also providing a boost thanks to strong demand for electronics and components.

Consumer spending, meanwhile, is expected to have stayed robust as households benefited from steady remittance inflows and a healthy labor market.

“Investment also likely stayed solid on the back of government-led infrastructure projects,” Moody’s Analytics said.

“The Duterte administration plans to spend P8 trillion to P9 trillion on infrastructure to 2022. Those plans got a boost late last year with the passage of the first tax reform bill, as it will help fund the ambitious infrastructure plans,” it added.

IHS Markit chief economist Rajiv Biswas, meanwhile, offered a fourth quarter estimate of 6.7 percent, which he said reflected robust growth in consumer spending as well as strong growth in construction and exports, albeit mitigated by the impact of rapid growth in imports.

“For calendar 2017, Philippines GDP growth is estimated to be 6.7 percent year-on-year, with overall growth momentum underpinned by rapid growth in consumption expenditure, investment and exports,” he said.

ANZ Research economist Eugenia Victorino, ING Bank Manila senior economist Joey Cuyegkeng and Banco de Oro Unibank market strategist Jonathan Ravelas also forecast 6.7 percent growth for the last three months of the year.

“Although the momentum in industrial production has been easing, the rise in government spending should have provided a significant offset. Several infrastructure projects broke ground in the last quarter raising employment opportunities,” Victorino said.

Cuyegkeng pointed to a recovery in agriculture, private and public spending — particularly for infrastructure for the latter — and a recovery in exports, among others.

“The expected impact of excise taxes likely contributed to a faster fourth quarter economic activity as households anticipated higher costs in 2018,” he added.

Ravelas did not elaborate on his forecasts.

Natixis economist Trinh Nguyen, meanwhile, expects fourth quarter GDP to decelerate to 6.6 percent due to a higher deficit and a slowdown in consumption growth.

“[D]ata shows that the trade balance increased significantly in fourth quarter on lower growth of exports and an acceleration of import growth. Loan growth, data, too, shows a deceleration of growth rates, although still high,” she said.

Security Bank Corp. economist Angelo Taningco expects a fourth quarter result of 6.5 percent, “lower than [the unrevised]third quarter 6.9 percent because I expect a growth moderation in household consumption amid higher inflation; wider trade deficit; and slowdown in agricultural production due to adverse weather conditions such as typhoons/tropical storms.”

The least optimistic was Land Bank of the Philippines market economist Guian Angelo Dumalagan, who forecast as fourth quarter easing to 6.4 percent as an import surge and export slowdown intensified the negative contribution of net trade to GDP.

“Moreover, the annual growth of consumer spending likely decelerated, despite higher government spending on infrastructure. Last quarter’s growth likely brought the full-year average to 6.6 percent,” he said.


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