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Investment banks see faster H2 economic growth

Lawrence Agcaoili (The Philippine Star) - August 17, 2017 - 4:00pm

MANILA, Philippines - Investment banks expect the country’s economic expansion to accelerate in the second half after a stronger-than-expected gross domestic product (GDP) growth in the second quarter.

Nomura Securities Ltd. said in a research note titled “Philippines: Growth gathers pace in Q2” that the country’s GDP growth would accelerate to 6.9 percent in the second half from 6.4 percent in the first half.

It has set a GDP growth target of 6.7 percent for 2017, slower than the 6.9 percent expansion booked last year when election-related spending boosted investments and private consumption.

“For full-year 2017, we reiterate our GDP growth forecast of 6.7 percent, which implies a pickup to 6.9 percent in second half from 6.4 percent in the first half, driven by more fiscal support to growth, particularly from an increase in capital spending,” Nomura said.

The Duterte administration has launch its Build Build Build program as part of efforts to raise infrastructure spending.

“More progress on infrastructure spending should also continue to crowd in private investment, while we expect household consumption to remain resilient,” Nomura said.

The country’s GDP growth accelerated to 6.5 percent in the second quarter from 6.4 percent in the first quarter.

ANZ economist for Asean Eugenia Victorino said the economy is expected to grow 6.5 percent this year, slower than the 6.9 percent growth in 2016.

“We expect 2017 GDP growth to average 6.5 percent. Despite the slowdown in private consumption growth, strong investment and the improvement in exports will remain supportive of growth,” Victorino said.

However, Victorino said ANZ is increasingly cautious of the quality of growth if real estate and construction continue to drive activity.

On the other hand, DBS Bank Ltd economist Gundy Cahyadi said the bank is sticking to its full-year GDP growth target of 6.4 percent for 2017 despite the stronger-than-expected expansion in the second quarter.

“Second quarter GDP growth came in above our expectations but we don’t see a compelling need to adjust our 2017 forecast of 6.4 percent as yet,” he said.

Investment growth actually did slightly worse than expected while private consumption growth was better than expected, according to Cahyadi.

“Inventory drawdown has continued, and this indicates the normalization in investment numbers is likely to remain a dominant theme ahead. Certainly, however, upward risks remain,” he said.

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