Economy grew faster in Q2 – bankers

MANILA, Philippines - The Philippine economy is seen to have grown at a faster pace in the second quarter, banks said in separate research notes yesterday.

In a report, UK-based Barclays said the Philippine economy likely grew by 6.7 percent in the second quarter.

“Ongoing strength in private consumption, investment along with an inventory rebound should take growth higher,” Barclays said.

This forecast is within the government’s 6.5-to 7.5-percent target for the full year growth but still slower than the 7.6-percent growth in the second quarter of 2013.

Official second quarter gross domestic product data will be released by the Philippine Statistics Authority on Aug. 28.

But Singapore-based DBS Bank and Moody’s Analytics have a less optimistic outlook on the second quarter growth numbers, as their projections are below government target.

DBS said the economy may have grown by 6.3 percent in the second quarter, while Moody’s Analytics said growth may have hit 6.2 percent.

“Data released in the past week certainly points to a faster GDP growth in the second quarter from the previous quarter. Export growth, which has been disappointing so far this year, came in strong at over 20 percent year-on-year in June,” DBS said in a research note.

“Note that strong manufacturing was one key factor that led to the 7.2-percent GDP growth in 2013. Another year of strong manufacturing sector is still on the cards this year, if export growth were to sustain its current trend,” the bank said.

At the same time, DBS pointed out the robust inflow of remittances from overseas Filipino workers that continue supporting the already strong private consumption growth, the main driver of the economy.

“This is important, especially noting the fact that inflationary pressures have started to build up in the economy. With OFW remittances trending at $2 billion a month, expect private consumption growth to remain close to six percent,” DBS said.

Moody’s Analytics echoed DBS’ observations in terms of recent economic indicators that point to a stronger GDP growth in the second quarter.

“High-frequency economic data have all been pointing in the right direction. Industrial production is growing in the double digits again, and exports and imports have improved,” the research firm said.

“We expect GDP growth to be slightly below trend, but reconstruction work could push the economy towards trend in the second half,” Moody’s Analytics said.

The government kept its 6.5-to 7.5- percent growth target for 2014 in hopes reconstruction efforts will pull back growth and sustain the strong 7.2-percent and 6.8-percent growth in the previous two years.