MANILA, Philippines - Philippine economic growth expectations remain favorable despite disappointing first quarter results amid strong consumer spending as reflected in a number of demand indicators, a Bangko Sentral ng Pilipinas report said.
“The outlook for economic activity continues to be favorable on the strength of consumer spending, as evidenced by the trend of various demand indicators,” according to the latest Highlights of the Meeting of the Monetary Board on Monetary Policy Issues.
The central bank pointed out in its report vehicle and electricity sales have remained “brisk,” while the Purchasing Managers Index has stayed above 50. The PMI is an indicator for the manufacturing sector in which a reading of 50 or higher reflects an expanding industry.
The BSP also said the outlook of consumers and domestic firms continues to be “generally upbeat” for the short-term.
“Meanwhile, manufacturing activity and exports have remained broadly steady,” the report stated.
“The outlook for domestic demand conditions is also likely to benefit from continued typhoon-related reconstruction and rehabilitation spending in 2014,” the BSP added.
The Philippine economy grew by a slower-than-expected 5.7 percent in the first quarter from 7.7 percent in the same period last year.
But the government has stood firm on its 6.5- to 7.5-percent economic growth target for the full year, banking on the strong consumer spending and rebuilding efforts following typhoons that hit the country late last year.
“The weaker-than-expected growth in Q1 2014 reflected the lingering effects of Super Typhoon Yolanda that hit the country in the previous quarter,” the BSP said.
The slower rise in government spending and investments, and the weaker growth of the manufacturing sector also pulled down the quarter’s expansion.
“Nonetheless, the Philippine economy continued to expand at an above-average rate in Q1 2014, driven by robust consumer spending and exports on the expenditures side, and by solid gains in the services sector on the production side,” the central bank said.
Last year, the economy grew by a stellar 7.2 percent, sustaining the 6.8-percent expansion in 2012.