Think tank expects GDP growth moderating in Q3

MANILA, Philippines — Barcelona-based think thank Focus Economics said the pace of the country’s economic expansion moderated as consumers have grown more cautious in the third quarter.

Focus Economics said the gross domestic product (GDP) growth of the Philippines likely moderated in the third quarter.

“Household spending, the main engine of growth, continues to expand even as consumers have grown more cautious in Q3 due to rising fuel and electricity prices, as well as ongoing unrest in Marawi City,” it said.

The think tank noted a softening in the manufacturing Purchasing Managers’ index (PMI) despite inching up to 50.8 percent in September from 50.6 percent in August.

“Signs of softening demand were also reflected in August’s PMI reading, which hit its lowest level since the survey started on the back of a significant slowdown in order book growth,” it said.

On the bright side, Focus Economics said based on the July export data, the weakening of the peso has benefited exporters.

Likewise, the think tank said credit growth remained robust, growing 19.7 percent to P6.37 trillion in August.

Moreover, Focus Economics said the government is actively trying to support growth by boosting infrastructure expenditure, which jumped 25 percent in annual terms in July after expanding at a lower-than-budgeted pace in the first half.

The economy grew 6.5 percent in the second quarter from 6.4 percent in the first quarter, bringing the expansion to 6.4 percent in the first half.

Economic managers maintained the GDP growth target at 6.5 to 7.5 percent for this year from 6.9 percent last year.

“Despite decelerating from last year, the economy will continue to grow at a robust pace this year and next, as consumer spending is underpinned by a tighter labor market and growing remittances,” Focus Economics said.

It expects the Philippines to post a GDP growth of 6.4 percent for 2017 and 2018.