Philippine economy to grow 6% this year, says Barclays

The Philippine economy will grow 6 percent this year in terms of the gross domestic product (GDP), London-based Barclays Capital said in its revised outlook for the country. Barclays' economist Prakriti Sofat said the 7.3 percent growth the Philippine economy posted in the first quarter was better than the 5 percent forecast by Barclays Capital. Quarter-on-quarter, she pointed out that the country's GDP expanded by 3 percent or about three times market expectations and the fastest pace since September 1988. [See Economy grows 7 percent in Q1, highest in 3 decades – NEDA] "Election-related spending no doubt provided a healthy boost to the economy, especially domestic demand. History shows that in the quarter before elections, GDP bounces strongly," Sofat stressed. "We are revising our 2010 GDP forecast to 6 percent from 4.3 percent previously," Sofat said. The main impetus to the first quarter growth came from private consumption, which rose by 5.9 percent and added 4.5 percentage points to domestic output, Barclays Capital said. Household spending was driven by election-related handouts and robust remittances from overseas Filipino workers that rose by 7 percent in the first quarter of the year, Barclays Capital said. "Looking ahead, the outlook for consumption remains strong given our expectations that remittances will rise by 10 percent in 2010," Sofat said. Investment was another main driver in the GDP growth, expanding by 15.7 percent and adding 2.7 percentage points to the GDP growth from January to March, the economist cited. "The turn around in investment was much sharper than we were anticipating and suggests that businesses are becoming more confident about the recovery," she said. VS, GMANews.TV