MANILA, Aug 31 (PNA) — The Philippine economy is expected to hit and even exceed the government’s growth target for 2013 given the strong output in the first half of the year.

It grew, as measured by gross domestic product (GDP), by 7.6 percent as of end-June this year, higher than year-ago’s 6.4 percent, same as China’s expansion.

Growth in the second quarter remains robust at 7.5 percent but this is slower than the previous quarter’s 7.7 percent, which is also similar to that of China.

The government’s growth target for this year is between six to seven percent.

Analysts said the slight slowdown although not worrisome remains a factor to lookout for.

Banco de Oro Unibank (BDO) chief strategist likened the Philippines economy to a car and eyes a growth of 7 to 7.5 percent.

“What we want is consistent growth at least six to seven percent. So anything above seven percent is a saving grace. It’s a bonus,” he told PNA in an interview.

He lauded the consistent six percent-level expansion of the domestic economy for several quarters now.

“As long as we get that consistent growth that should be a gain,” he said.

Ravelas said the issue surrounding the Priority Development Assistance Fund (PDAF) should be addressed as soon as possible since this might put a dent on public infrastructure spending.

“If we could hasten public infrastructure spending that should spur more activity,” he said.

Ravelas said the recent flooding in Metro Manila and several nearby provinces could negatively impact on growth but the weakening peso is a mitigating factor.

He said peso depreciation is positive on families of Overseas Filipino Workers (OFWs) and the business process outsourcing (BPO) as this increases the peso-value of their dollars.

Consumer spending accounts to about seventy percent of the country’s output, thus, remittances and BPO receipts are important factors to the economy.

Relatively, Bank of the Philippine Island (BPI) lead economist and Assistant Vice President Emilio S. Neri Jr. expects a “slightly below seven percent” growth for the domestic economy this year.

He said the government frontloaded its spending in the first quarter at about 70 percent of the programmed for the year.

He said the remaining spending program, when distributed throughout the rest of the year, is already small, thus, is not expected to be a big contributor to growth.

“But still if we can grow by more than six to 6.5 percent that would still be acceptable to the market and that proves that the Philippines, unlike everybody else in the region, continues to enjoy strong growth,” he added.

Similarly, Hongkong and Shanghai Banking Corp. (HSBC) economist Trinh Nguyen, in a research note, revised upwards the bank’s growth forecast for the country this year to 7.1 percent from 6.4 percent previously.

She explained that “the Philippines has been caught in the rush as investors exit emerging markets,” but cited that “in our view it should not be lumped together with economies which are overly reliant on foreign funding to support the current account deficit and growth.”

She said the country continues to enjoy surpluses in its current account, provided by remittances among others, and the balance of payments (BOP), which as of end-July this year stood at US$ 3.6 billion.

The country has a US$ 4.4 billion BOP surplus target this year.

Nguyen said HSBC expect the surplus in the Philippines current account and BOP position to continue up to 2015.

She said the growth report for the second quarter of the year showed “momentum is strong despite a drag from net exports” because of robust investment spending and private consumption.

“We expect a recovery in global demand to boost exports and remittances in fourth quarter 2013, supporting a growth rate of 7.1 percent for 2013,” she said. (PNA)
DSP/JS/UTB