The Philippine economy likely grew by more than 7 percent in the first quarter, driven by strong government spending on infrastructure in tandem with the robust manufacturing sector, economists from First Metro Investment Corp. and University of Asia & the Pacific said in a joint report Monday.
The projection for the January-to-March period this year would be faster than the 6.4-percent actual expansion in the same period last year.
Citing latest available data, the economists said the economy added 2.4 million jobs in the first month of 2018 alone, the highest in a non-election year, with the industry sector”•construction and manufacturing”•clearly making a headway.
Manufacturing output surged 21.9 percent year-on-year in January, providing support to the robust job numbers, the report said.
The economists said from the demand side, infrastructure spending in December exceeded 20 percent, while capital goods imports kept a positive pace.
“All told, we see GDP growth accelerating to beyond 7-percent pace in Q1, given the strong multiplier effects of job growth, and robust manufacturing and construction sectors,” the report said.
The economists said the P8.4-trillion ‘Build, Build, Build’ infrastructure program of the Duterte administration would further boost economic growth in the years ahead.
Under the program, the government aims to build more airports, seaports, highways, bridges, railways, and water and irrigation projects across the country to stimulate economic activities.
The government will build a 25-kilometer subway in Metro Manila to decongest the metropolis of heavy traffic that was causing about P3.5 billion in economic losses daily.
Meanwhile, the economists expressed concern over the rising inflation rate which hit 3.9 percent in February, using the new consumer price index base.
“The rebasing has been carried in accordance with its schedule revision every six years to base 2012, and most evidence shows that CPI tends to be slightly overstated. The effect of Train [Tax Reform for Acceleration and Inclusion law] may have been more fully felt, even though the sharp 21.9 percent Brent crude oil price and peso depreciation would account for much larger part of the uptick,” the economists said.
First Metro and UA&P said the Bangko Sentral ng Pilipinas might raise policy rates in April or May.
“OFW remittances remained in the green, but portfolio capital outflows and the stronger US economy put pressure on the peso,” it said.
