DBS pegs Q2 GDP growth at 5.7%

MANILA, Philippines - DBS Bank Ltd. of Singapore said the Philippine economy likely grew faster in the second quarter of the year from the first quarter on the back of higher government spending.

In a report, DBS said the country’s gross domestic product (GDP) grew faster at 5.7 percent in the second quarter from 5.2 percent in the first quarter amid weak global demand.

The investment bank said the economy grew faster despite the 8.8 percent dip in the export of goods in the second quarter of the year.

 “While this was disappointing, it was a common theme in the region. More importantly, domestic demand has continued to support overall GDP growth,” the bank said.

DBS said private consumption growth remained steady at 5.5 percent in the second quarter amid the steady growth in cash remittances sent home by overseas Filipinos.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed cash remittances by Filipinos living and working abroad grew 5.6 percent to $12.08 billion in the first six months of the year from $11.45 billion in the same period last year.

DBS said budget spending grew 12.4 percent in the second quarter from only 4.5 percent in the first quarter.

 “Overall though, private sector sentiment remains rather firm while the scale of public spending stays supportive. Investment growth is likely to remain very close to 10 percent in the second quarter,” it said.

The Philippines recorded a 5.2 percent GDP growth in the first quarter of the year from 5.6 percent in the same quarter last year on the back of anemic spending caused by delays in the implementation of much-needed infrastructure projects.

The government is set to announce the country’s GDP growth figure for the second quarter on Thursday.

DBS said the country’s GDP growth could reach six percent amid weak global demand.

 “Unless fiscal expenditure collapses again in 2H15, overall GDP growth may still reach six percent for the full-year,” DBS said.

Economic managers see GDP expanding between seven percent and eight percent this year.

The Philippines missed its GDP growth target of between 6.5 and 7.5 percent as the domestic economy expanded only by 6.1 percent last year from 7.2 percent in 2013.