Philippine investment growth seen to ease after polls

CEBU, Philippines - Singapore-based DBS Bank Ltd. sees a moderation of the Philippines' investment growth in the coming quarters after the election season.

"Given that there has been a frontloading of investment ahead of the May elections, however, we reckon that there will be a moderation in growth momentum going forward. The sharp spike in investment growth over the past two quarters is not sustainable," DBS said in a research note published on its website.

 In the past two quarters, DBS noted that investment growth averaged an unprecedented 24.9 percent — reminiscent to the 2010 pre-election period.

 "On a two-quarter average basis, the 2010 first to second quarter period was the only other occasion when investment growth was above 20 percent. Not surprisingly, it was also a pre-election period," the Singaporean bank said.

 Sought for his comment yesterday on DBS' projection on investment growth, Cebuano economist Fernando Fajardo said investors might be cautious for the moment and "have a wait and see attitude pending the color of the new administration" of President-elect Rodrigo Duterte.

 "There is still so much uncertainty and questions to answer about the quality of his incoming Cabinet," Fajardo said.

 "But if indeed there is not much change in the economic policies to be pursued by the new government, this anxiety will soon vanish," added Fajardo, economics professor at University of San Carlos.

 In the first quarter of 2016, Philippine investment growth was up 25.6 percent, the strongest growth in five years; and private consumption also rose 7 percent, the highest in three years.

 These, among other drivers, brought the country's gross domestic product (GDP) to grow by 6.9 percent in the first quarter, one of the fastest growing in Asia.

 DBS sees the country's full-year GDP growth closing to 6.5 percent rather than 7 percent.

 "On sequential terms, GDP growth tends to be rather volatile on the quarterly basis. The first quarter data has hardly changed the fact that GDP growth has been running at a 6.3 percent (up from 6.1 percent previously)," the bank noted.

 The government has set the country's GDP growth target at 6.8-7.8 percent this year.

 DBS said: "As far as the region is concerned, the Philippines remains one of the fastest growing economies, up there with India and China."  (FREEMAN)