Research: PHL economy to grow under 6% in Q1

An economic slowdown will pull down the Philippines’ gross domestic product (GDP ) to below 6 percent in the first quarter, an investment bank and a think tank said in a report issued on Wednesday. “The GDP growth for the first quarter will likely be a little less than six percent, at worst, given a very strong rebound in agriculture from last year’s El Niño drought, and double-digit growth in manufacturing and the mining sectors," said the Metrobank Group’s First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) in the April issue of the Market Call Capital Markets Research. The rising inflation will cause private spending to take a break in the second quarter, according to the research note. It pointed out, however, that private spending will make a rebound in the third quarter triggered by higher government spending under the Aquino administration’s public-private partnership scheme. “While a slowdown is generally expected," the investment bank and the think tank said, “we do not expect this to be severe and thus, we remain cautiously optimistic for the coming quarters." Govt forecast The Cabinet-level Development Budget Coordination Committee (DBCC) sees the GDP growing 7 percent to 8 percent this year on the heels of last year’s an unexpected of 7.3 percent. The country was on the verge of a recession after the global financial crisis slowed down its GDP to 1.1 percent in 2009 from 3.8 percent in 2008. The economic uncertainties in the Europe, Japan, and the United States, meanwhile, caused a 9-percent slowdown in the country’s exports. “However, the US economy is emitting positive signals, and growth is likely to rebound starting the second quarter," the two institutions added. FMIC and UA&P also said, “Despite higher oil prices, which appear to have plateaued in April, inflation will remain below five percent in the second quarter, considering very stable rice and other food prices." The BSP has raised its policy rates by 50 basis points so far this year, bringing the overnight borrowing rate to 4.5 percent and the overnight lending rate to 6.5 percent. The Central Bank considers this a preemptive move to keep inflation expectations well anchored. The BSP raised the rates during the policy rate-setting meetings on March 24 and May 5. FMIC and UA&P also noted the impact of the political tensions in the Middle East and North Africa (MENA) on the remittances of overseas Filipino workers (OFWs). “Looking at the previous growth rates of remittances, it can be seen that they have been continually slowing down. However, this can be considered temporary resulting from several repatriations of OFWs from the MENA regions," the two institutions added. — With Paterno Esmaquel II/VS, GMA News