GDP goal still within reach as growth engines rev up

Higher government spending and the surge in trade in the July-to-September period will allow Philippine economy to grow by as much as 7.5 percent this year, according to a local think tank.

In its latest “Market Call” report, the Capital Markets Development Initiative (CMDI) of the First Metro Investment Corp. and University of Asia and the Pacific said the GDP target of 6.5 percent to 7.5 percent remains attainable despite the weakness of the peso.

The CMDI also said the US Federal Reserve may not raise interest rates in December, which will relieve some pressure on the peso toward October.

“We believe that the NG’s [national government] promise to roll out big-ticket projects, coupled with improving domestic and external demand, should gear up to a faster economic expansion, such that the full-year target of 6.5 percent to 7.5 percent will easily be hit,” the report read.

The CMDI expects the national government’s strong spending on infrastructure to continue in the second half of the year.  The report noted that the recent double-digit growth in infrastructure spending in July, and the 17.6-percent increase in Bureau of Internal Revenue (BIR) collections are “strong indicators” that public spending will continue to be robust.

The think tank added imports are likely to post above 10-percent growth in the third quarter, while exports will also keep posting a double-digit growth in the coming months on the back of better US economic growth.

“The US economy has shown robustness in GDP growth in the second quarter and strong gains in job creation in June to August, while the European Union, Japan, China and India keep on surprising in the upside,” the CMDI said.  In the January-to-June period, the economy grew 6.4 percent, slower than the 7 percent posted in the same period a year ago.

Data released by the Philippine Statistics Authority showed public construction growing by 12 percent in the second quarter. This was significantly slower than the 33.5 percent recorded in the same period last year. In the first semester, public construction contracted by only 9 percent, compared to 34.9 percent recorded a year ago. Also, government final consumption expenditure posted a 7.1-percent growth, slower than the 13.5 percent posted last year.

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A professional journalist for over a decade, Cai U. Ordinario currently writes macroeconomic and urban development stories for BusinessMirror. She has received awards for excellence in reporting on the macroeconomy and statistics. She was also cited for her contribution to statics reporting by the National Statistical Coordination Board (now the Philippine Statistics Authority). She is a recipient of journalism fellowships including the Jefferson Fellowship from the Honolulu-based East West Center. She is currently completing her Masters degree in Communication at the University of the Philippines. She graduated with a degree of Bachelor of Arts Major in Journalism from the University of Santo Tomas.