GDP seen to grow 6% this year

Published on Wednesday, 14 November 2012 22:32

Written by Jennifer A. Ng / Reporter

The Philippines is well on its way to posting an economic-growth rate of 5.5 percent to 6 percent this year, thanks to stronger gross domestic product (GDP) growth in the fourth quarter, a local think tank said in its report.

First Metro Investment Corp. (FMIC) and University of Asia and the Pacific’s (UA&P) Capital Market Research said economic growth during the fourth quarter would be spurred mainly by higher government spending and election spending.

“Greater construction activity happens during the dry season. We can also expect an improvement in the absorptive capacity of government agencies, and this would help boost fourth-quarter disbursements,” said the think tank’s periodic report titled “The Market Call.” 

“These developments support our expected GDP growth of 5.5 percent to 6 percent for 2012,” the report read.

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Capital Market Research’s projection for the Philippines’s GDP growth for 2012 is consistent with that of the government’s forecast of a 5-percent to 6-percent increase.

The think tank said the country’s economic performance in the fourth quarter would make up for the expected slowdown in GDP growth for the July-to-September period.

“The prolonged negative impact of the heavy rains and floods in August will certainly result in a slightly
lower GDP growth in the third quarter, but a strong recovery is expected in the fourth quarter,” the report read.

The think tank also said exports were “likely” to bounce back to positive growth territory as the recoveries in East Asia, countries in Southeast Asia and the United States gain traction.

“Nevertheless, full year-growth [for exports] should remain single-digit,” the report read.

Consumption spending, meanwhile, will be bolstered by expectations that the 3.5-percent average inflation in the third quarter will be replicated in the fourth quarter.

Spending among Filipino consumers will also be boosted by projections of more remittances from overseas Filipino workers (OFWs) in the fourth quarter despite the appreciation of the peso. 

“OFWs are expected to send more dollars to compensate for any shortfall in their peso requirements. With this, we retain our forecast of an annual 5-percent to 6-percent growth rate in OFW dollar remittances for the year,” the report read.