Metro Manila (CNN Philippines, November 1) — Economic growth likely bounced back in the third quarter helped by a recovery in public spending, according to a poll of analysts conducted by CNN Philippines.
All 12 economists tapped for the regular economic poll said growth will definitely pick up coming from the second quarter’s 5.5 percent pace. Their growth estimates hit a 6 percent average and median forecast. This would be the first time that quarterly growth will fall within the government’s 6-7 percent target for 2019, as activity slowed in the first six months.
The delayed passage of the national budget left new and continuing programs unfunded, stunting the rollout of major infrastructure projects, according to the economic managers of the Duterte government.
The third-quarter median estimate also matches the high end of the 5.8 to 6 percent forecast given by the Bangko Sentral ng Pilipinas (BSP) last week.
Among the economists polled by CNN Philippines, Mitzie Irene Conchada, associate dean of the De La Salle University School of Economics, said third quarter growth could recover with “government expenditure on infrastructure and renewed consumer confidence with slower inflation”. Higher remittances from Filipinos working overseas also during the third quarter can be another positive factor, she added.
From year-on-year declines in government spending, budget releases have risen for three straight months to even log a 39 percent climb in September. Still, this was not enough to reach the latest spending targets.
READ: Infrastructure spending up 54% in September as some projects get done
Victor Abola, professor at the University of Asia & the Pacific, said strong consumer spending coupled with low inflation also helped boost economic activity, following a huge jump in employment during the period.
Five straight months of growth in exports would also boost overall expansion, with ING Bank senior economist Nicholas Antonio Mapa even seeing a 6.3 percent climb for the quarter.
Market watchers said the 6-7 percent growth goal would still be “difficult to achieve,” dragged by the weak performance from January to June. However, all agreed that faster growth will be sustained until the fourth quarter as the impact of spending delays “dissipate,” according to ANZ Research.
Softer inflation
The same poll bared inflation expectations remain cool, with a 0.8 percent median forecast for October. Analyst estimates came from a narrow range of 0.8-1.1 percent, which would be close to matching the three-year low of 0.9 percent logged in September.
Sun Life Financial economist Patrick Ella gave a 0.8 percent estimate amid “quite stable” prices of food, energy, transport, even as he flagged that meat prices have moved up due to the African Swine Fever.
A BSP unit pegged price increases of basic goods between 0.5-1.3 percent in October, well below their 2-4 percent target range. This would be a marked slowdown from last year’s 6.7 percent, the highest in nearly a decade due to surging rice and world crude costs. Base effects have since kicked in, with BSP Governor Benjamin Diokno assured that inflation will remain steady for the rest of the year.
Inflation has averaged 2.8 percent from January to September.
The Philippine Statistics Authority will release latest inflation and growth data on November 5 and 7, respectively.
