Philippine growth slows below 6% in Q2 – Credit Suisse

Lawrence Agcaoili - The Philippine Star

MANILA, Philippines - The country’s gross domestic product (GDP) growth likely slowed to below six percent in the second quarter, according to Credit Suisse.

In a research note titled “Philippines macro wrap: 2Q GDP likely to disappoint,” Credit Suisse economist Michael Wan said the Philippine economy likely grew 5.8 percent in the second quarter from 6.4 percent in the first quarter.

The economy has been on the downtrend from 7.1 percent in the third quarter to 6.6 percent in the fourth quarter, to 6.4 percent in the first quarter of the year, and to 5.8 percent in the second quarter.

“We expect the second quarter GDP to moderate further to 5.8 percent from 6.4 percent in the previous quarter, which will likely be a downside surprise,” Wan said.

Wan pointed out private consumption and exports are expected to be the source of the second quarter GDP disappointment.

“Most of the consumption-related indicators that we track, such as consumer goods imports, industrial production, manufacturing sales and also motor vehicle sales have all moderated in the second quarter,” he said.

Latest data from the Philippine Statistics Authority (PSA) showed a steady export growth of 0.8 percent to $4.91 billion in June from $4.87 billion in the same month last year while imports slipped 2.5 percent to $7.06 billion from $7.24 billion.

“Timing of the Eid holiday was likely one of the contributors to the weakness, with other regional economies such as Indonesia and Malaysia also seeing a drop in June exports. Nonetheless, other Philippines-specific factors are likely at play too, with the recent Marawi siege potentially contributing to a moderation in agriculture exports,” Wan said.

The economist said fixed investment likely moderated slightly, with capital goods imports slowing to five percent in the second quarter from 7.3 percent in the first quarter.

Furthermore, he said government spending showed some pick-up in the second quarter.

Last June 22, Credit Suisse lowered its GDP growth forecast for the Philippines to six percent instead of 6.4 percent due to the projected weak private consumption and the moderation of exports.

“We continue to expect GDP to disappoint consensus in 2017. Today’s data points fit well with our view that full-year 2017 GDP will surprise on the downside in the Philippines at six percent,” Wan said.

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