Philippine Q3 growth may hit 5.2%

By Luisa Maria Jacinta C. Jocson, Reporter

THE Philippine economy would probably expand by as much as 5.2% in the third quarter — still below the government’s target — after posting its slowest growth in more than two years a quarter earlier, according to First Metro Investment Corp. (FMIC) and the University of the Asia and the Pacific (UA&P).

“We still see sufficient strength in the economy to get a 5-5.2% year-on-year third-quarter gross domestic product (GDP) growth,” they said in a report.

FMIC and UA&P’s previous forecast was for full-year GDP to hit the lower end of the government’s 6-7% goal. Second-quarter GDP grew by a weaker-than-expected 4.3%, bringing the first-half growth to 5.3%.

The local statistics agency will report third-quarter GDP data on Nov. 9.

Growth in the third quarter would be driven by state and consumer spending and improved jobs, according to the report.

“Elevated National Government spending in the third quarter should provide the stimulus for the quarter, even as we expect a strong rebound in employment and consumer spending starting September,” FMIC and UA&P said.

“We expect a strong rebound in employment by September as firms gear up for the Christmas season, especially in those sectors lashed by the rain,” they added.

FMIC and UA&P said fourth-quarter growth would probably exceed 6% amid a rebound in consumer spending and growth in the industry, manufacturing and service sectors.

“The industry sector expansion will be broad-based, although manufacturing will take the lead,” they said. “The service sector should see domestic and foreign tourism drive trade, transportation and storage, and accommodations and food services starting September.”

“We still see full-year GDP growth at a respectable 5.5% despite the global slowdown,” they added.

FMIC and UA&P expect inflation to remain elevated until October before settling within the Bangko Sentral ng Pilipinas’ (BSP) target by November.

“The inflation outlook has become cloudy,” they said in the report. “We still expect headline inflation to go below BSPs’ 4% target ceiling by November even though we may expect elevated crude oil prices until November.”

Inflation quickened to 5.3% in August — the 17th straight month that it breached the central bank’s 2-4% target — after easing for the past six months. Inflation in the first eight months averaged 6.6%, above the BSP’s 5.8% full-year forecast.

This week, oil companies cut pump prices by 20 centavos a liter for gasoline and diesel, and by 50 centavos a liter for kerosene. This ended the 11-week streak of price increases since July.

Some lawmakers have proposed to suspend taxes on petroleum products amid high pump prices.

“Food prices will likely decelerate as rice harvests come to markets in late September and October, at the same time when we are beginning to see Thai rice prices easing from their August peak,” according to the FMIC and UA&P report.

President Ferdinand R. Marcos, Jr. earlier this month imposed a price ceiling on regular and well-milled rice amid spiraling prices.