FMIC sees stronger growth in Q4 2019

MANILA, Philippines — Economic growth is expected to strengthen in the fourth quarter of 2019 as indicated by encouraging employment and poverty data as well as increased consumption during the period, according to First Metro Investment Corp. (FMIC).

In its latest Market Call report with the University of Asia and the Pacific (UA&P), the investment banking arm of the Metrobank Group said these “push factors” would spur investment spending among private firms.

“Recent economic indicators point to a stronger Q4, with positive employment print and poverty data indicating better investment numbers for the last quarter of 2019,” the report said.

“Household consumption would still benefit from this, softer inflation (on average) and low interest rates,” it added.

Moving forward, FMIC and UA&P expect the national government to ramp up infrastructure spending “amidst the still-large fiscal space.”

Continued investments by the private sector on residential and commercial buildings should continue to drive capital goods investments, the report also noted.

The economy grew by 6.2 percent in the third quarter of 2019 as the government spent more for projects, the agriculture sector recovered, and services remained a strong contributor.

This was faster compared to the 5.5 percent gross domestic product (GDP) growth in the second quarter and six percent in the third quarter of 2018.

Lower unemployment numbers were seen at the beginning of the fourth quarter in October as all economic sectors were able to create more jobs.

Results of the October 2019 round of the Labor Force Survey (LFS) showed unemployment  falling to 4.5 percent in the October 2019 round from 5.1 percent in the same period a year earlier, the lowest among all October rounds in a decade.

Preliminary results for the entire 2019 survey showed that based on the average of the four LFS rounds – January, April, July and October – the unemployment rate fell to 5.1 percent in 2019 from 5.3 percent in 2018.

Poverty incidence, pertaining to the proportion of Filipinos whose per capita incomes were not enough to meet their basic food and non-food needs, meanwhile, fell to 16.6 percent in 2018 from the revised 23.3 percent in 2015, according to government data released in December.

“The economic growth for 2015 to 2018, averaging at 6.6 percent, proved to be more inclusive than in the past,” said the report.

In December 2019, consumer  prices rose at a faster pace anew, driven by brisk holiday spending and supply constraints caused by recent typhoons.

Headline inflation quickened to 2.5 percent in December from 1.3 percent in November and 5.1 percent in December 2018. This brought the 2019 average inflation to 2.5 percent, well within the government target of two to four percent.