Economy likely grew by 6.4% in 4th quarter

MANILA, Philippines — Economic growth in the fourth quarter of 2019 likely accelerated between 6.3 percent and 6.4 percent as government spending recovered after budget delay, according to foreign macroeconomy research firms. 

In a research brief issued over the weekend, London-based Capital Economics said growth likely picked up again in the fourth quarter to 6.4 percent “on the back of stronger government spending.” 

“Looking ahead, however, while we think the economy should continue to expand at a decent pace, growth will slow a little. For starters, the support from fiscal policy will soon start to fade. The government is targeting an unchanged deficit of 3.2 percent of GDP,” said Capital economics. 

It also noted that the recent boost from consumer spending form very low inflation is also likely to ease as inflation climbs steadily higher over the coming year.

“The one big boost to the economy will come from looser monetary policy. The central bank cut interest by 75 basis points last year, and we expect a further 50 basis points of cuts by the end of this year,” Capital Economics said. 

The Philippine Statistics Authority (PSA) is set to announce the fourth quarter 2019 and full-year 2019 growth figures on Jan. 23. Likewise, the revisions to the third quarter growth figures are set to be released on the same day. 

IHS Markit, another Uk-based market research firm said the economy may have accelerated by 6.3 percent in the fourth quarter of 2019 “on the back of increased public spending.” 

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.