Improved government spending may drive the country’s GDP growth to as much as 5.2 percent in the third quarter, according to a local think tank.
In its latest Market Call report, the First Metro Investment Corporation-University of Asia and the Pacific (FMIC-UA&P) Capital Market Research said GDP growth in the third quarter may reach 5 percent to 5.2 percent.
“We still see sufficient strength in the economy to get a 5.0-5.2 percent YoY [year-on-year] Q3 GDP growth, while the acceleration of the above sectors plus consumer spending should bring back Q4 growth above 6 percent,” the local think tank said.
According to FMIC-UA&P, elevated national government spending in the third quarter should provide the stimulus for the third quarter, as the think tank expects a “strong rebound in employment and consumer spending starting September.”
It added that the industry sector expansion will be “broad-based,” although manufacturing will take the lead.
“The Services sector should see domestic and foreign tourism drive Trade, Transportation and Storage, and Accommodations and Food Services starting September,” the think tank said.
With this, FMIC-UA&P said it still sees full year GDP growth at a “respectable” 5.5 percent despite the global slowdown.
Last month, the think tank noted that spending from the national government would pave the way for a rebound in the second semester.
Slowing inflation would encourage more household consumption which would also boost GDP growth.
However, Oxford Economics said last Monday that based on its trackers, the country’s GDP growth may slow to a range of 4 to 5 percent in the third quarter.
The think tank said the data from its trackers is near Oxford Economics’ own growth forecast of 4.3 percent for the period.
“The Philippines and Indonesia are Asean’s two more domestically focused economies and the two where policy rates have been hiked well above the neutral rate. Our trackers suggest the impact on growth of tight policy continues to be more severe in the former than the latter,” Oxford Economics said.
While the Philippine economy’s growth on a quarter-on-quarter basis may represent a reversal from the contraction posted in the second quarter, the impact of high interest rates may extend beyond the third quarter, the think tank said.
“We think it will struggle to regain much more momentum, as the lagged impact of monetary tightening weighs further,” Oxford Economics said. (Full story here: https://businessmirror.com.ph/2023/09/26/q3-growth-to-slow-on-bsps-tight-policy/).
Image credits: Bernard Testa