MANILA: Philippine economy likely remained upbeat during the third quarter although growth may have slipped by a tad from the 7% reading seen three months prior due to a sustained export slump, aggravated by a decline in nickel production following several state-imposed mine closures, Moody’s Analytics said in a market view.
Analyst Jack Chambers said Philippine gross domestic product (GDP) may have grown by 6.9% from a year ago, with domestic consumption helping sustain rapid expansion.
“We look for Philippine GDP growth to come in at 6.9% year-on-year for the third quarter, decelerating slightly from the 7% result posted in the three months to June. The main drivers of the economy will continue to be domestically focused, with private consumption, investment and government spending all expanding rapidly,” Mr. Chambers said in a market forecast on Friday.
The Philippine Statistics Authority will report third-quarter GDP data on Nov. 17. If realized, the rate would again fall closer to the high end of the government’s 6-7% growth goal for the year and would keep the nine-month average at 6.9%. The forecast rate also picks up from the 6.1% clip recorded during the comparable period in 2015.
Growth has averaged 6.9% during the first six months of the year, marked by a 7% climb between April to June which was the fastest in three years, and a downward-revised 6.8% reading during the first quarter led by an investment surge and propelled by a seasonal boost from election-related spending.
Government spending surged by 30% in September from a year ago, reflecting a one-time payment of P20.475 billion to settle outstanding dues to the Philippine International Airport Terminals Co., Inc. for a botched project.
For the quarter, total disbursements grew 14.4% to P639.166 billion, outpacing a 5.1% rise in total revenues that amounted to P545.779 billion, according to preliminary Treasury data. This pulled the nine-month tally into a P213.7-billion fiscal deficit, still below the P308.7-billion cap set for the full year.
Moody’s said the persistent drag in global activity likely kept exports in negative territory, dampened by the Environment department’s decision to halt a number of mining operations.
“Exports likely slowed in the quarter. This is partly a result of subdued global demand. In addition, nickel exports will be dented by the temporary closure of several mines due to compliance issues,” Mr. Chambers said.
Environment secretary Regina Paz “Gina” L. Lopez in September suspended 20 more mines after results of an industry-wide audit pointed out poor compliance to mining regulation. Of the total 30 mines whose operations were halted under Ms. Lopez’s watch, 18 are nickel producers that accounted for 55.5% of the country’s total output in 2015. The Philippines is the world’s biggest nickel exporter.
Meanwhile, Socioeconomic Planning secretary Ernesto M. Pernia has said that increased infrastructure spending under the Duterte administration would help offset an export slump, which would allow the economy to expand between 6.3%-7.3% during the quarter.
Moody’s Analytics remains bullish towards the Philippine economy, in light of “buoyant economic conditions and gains in the service sector,” allowing the country to cement its position as one of the fastest global performers.
In a separate report, DBS Group Research economist Gundy Cahyadi pegged third quarter growth at 6.8%, with the expected slowdown seen as imports of capital goods may have “moderated.”
“Meanwhile, imports of consumer goods stayed robust at 54.9% in the period, suggesting that private consumption growth might have remained close to 7% in 3Q16,” Mr. Cahyadi said in a market preview.
