Nomura sees Philippines GDP growth at 6.5% in 2016

MANILA, Philippines – Nomura Securities Co. Ltd. sees the economic growth of the Philippines picking up to 6.5 percent this year after slowing down last year due to weak global demand and lack of government spending.

Euben Paracuelles, economist at Nomura, said the presidential and national elections in May would boost the country’s gross domestic product (GDP) growth that slowed down to 5.8 percent last year from 6.1 percent in 2014.

“For 2016, we reiterate our GDP growth forecast of 6.5 percent, which reflects our view that the elections in May 2016 will likely further boost already healthy domestic demand, rather than act as a headwind,” he said.

Aside from election-related spending boosting private consumption, he pointed out investments would pick up with the implementation of infrastructure projects under the public private partnership (PPP) scheme translating to higher foreign direct investments (FDIs).

“We expect more fiscal support to growth and further progress on the implementation of infrastructure projects, which should also crowd in private investment and FDI,” Paracuelles added.

The country missed the GDP growth target of seven percent to eight percent penned by economic managers for 2015.

The GDP growth peaked at 6.3 percent in the fourth quarter of last year from the revised 6.1 percent in the third quarter on the back of robust domestic demand and improved government spending.

Paracuelles said the country’s economic growth continues to be led by investments.

Investment spending rose by 22.5 percent year-on-year in the fourth quarter last year from 13.3 percent in the third quarter.

The strong growth was fuelled by the 17.4 percent jump in government spending in the fourth quarter of last year.

He also cited the faster rise in private consumption to 6.4 percent in the fourth quarter from 6.1 percent in the third quarter.