By Leslie D. Venzon
MANILA, Nov. 25 (PNA) — The Philippine economy is forecast to sustain its strong pace of growth in the second half of 2015 on the back of higher public construction spending even amid sluggish export demand and El Niño weather phenomenon.
In their latest Market Call, First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P), said the country’s gross domestic product (GDP) likely expanded by 6.2 percent in the July to September quarter.
“Election spending, savings from lower petroleum products and the inflation at 0.4 percent in September or below 1 percent for the third consecutive month should provide a good foundation for third-quarter GDP growth,” they said.
FMIC and UA&P also expect the economy accelerating further to 6.8 percent in the fourth quarter, bringing the full-year gain to 6.1 percent.
The National Economic and Development Authority (NEDA) remained optimistic about hitting at least the lower-end of the 7 to 8 percent GDP target for the year despite growing only 5.6 percent in the second quarter.
“Despite weak export demand in the third quarter, we remain optimistic that domestic demand will overcome this not only in the said quarter but in the fourth quarter as well,” noted FMIC and UA&P.
They said the domestic economy appeared buoyant, citing higher sales of the Manila Electric Company (Meralco) and public construction that shot up by 58 percent in the third quarter.
“Besides, consumer spending appears also to be picking up steam with election season definitely off to a start,” added the report.
Moreover, the FMIC and UA&P are optimistic that the export sector will recover to positive territory in the fourth quarter due to the sustained high growth trajectory of electronics exports and the expected robust expansion of the United States economy.
“Thus, the external sector will not pull down the economy, but rather provide a minor upward bump,” they said.
However, the report believes that the relatively tight monetary policy maintained by the Bangko Sentral ng Pilipinas (BSP) provides a possible downside risk to optimism that domestic demand will offset weak exports.
The official GDP figure for the third quarter of 2015 is set to be released on Thursday. (PNA)