MANILA: The Philippine economy is expected to accelerate to 7 percent in the first quarter and for the rest of 2017 on better agricultural output and expected rebound of the external sector. Analysts of First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said the easing of gross domestic product (GDP) to 6.8 percent in 2016 was a “minor blip” caused by the agriculture’s negative record.
Bad weather caused the agricultural sector’s output to decline by 1.3 percent and deprived the country of hitting the magic 7-percent growth benchmark. “The agricultural sector, and with its consumer spending, should rebound starting first-quarter 2017 and post modest growth for the year,” FMIC and UA&P said in the February 2017 issue of the Market Call. Analysts expect sustained domestic demand’s expansion pace, as they see “no signs of a let up in the upward momentum” in capital goods imports, public construction spending and manufacturing output. They also cited International Monetary Fund’s (IMF) forecast that the global economy will expand faster by 3.4 percent this year from 3.1 percent in 2016
FMIC and UA&P further said the robust domestic demand, coupled with the recovery of agricultural production and improved external demand, should provide the booster for the economy to grow by at least 7 percent this year. “Despite a slight improvement in the external sector, we foresee continued depreciation pressure on the US/PHP (dollar-peso) rate in first quarter but at a milder pace than in second half of 2016,” they added. FMIC and UA&P said headline inflation can hit 3 percent and hover around it in first half, as crude oil prices have stabilized while food supply should improve with better agricultural performance and early rice imports. “The outlook for second half may be less sanguine if the proposed excise taxes on petroleum products become effective then,” they said.
