GDP growth seen at low end of target in Q3

MANILA, Philippines - Philippine economic growth in the third quarter could have settled near the low end of the government’s 6.5- to 7.5-percent target, two foreign banks said in separate research notes.

Mundy Cahyadi, economist at Singapore-based DBS, said the investment bank has forecast expansion at 6.7 percent during the third quarter, faster than the 6.4 percent pace in the second quarter.

This is, however, a revision of the bank’s 6.9-percent projection earlier for third quarter gross domestic product (GDP) growth.

“There is some drag from fiscal spending, which has actually shrank on a year-on-year basis, despite fiscal revenues coming in strong in the period,” Cahyadi said.

 “The underlying support from private consumption remains resilient, supported by resilient OFW (overseas Filipino workers) remittances among others. Exports have continued to outperform our expectations, although we now see growth easing into 2015,” he asdded.

UK-based Barclays, meanwhile, said in a research note that growth could have picked up to 6.5 percent in the third quarter from the previous three months.

“Strong private consumption led by strong export momentum will support growth,” the bank said.

Official third quarter GDP data will be released by the government on Thursday.

The Philippine economy grew at a faster pace of 6.4 percent in the second quarter from a disappointing 5.6 percent clip in the first three months of the year.

But the first-half growth of six percent still came short of the government’s full-year target of a 6.5 percent to 7.5 percent.

Earlier this month, government officials said the low end of the target range is still doable despite a lower-than-expected first half growth.

Multilateral institutions earlier forecast Philippine economic growth settling below the government’s goal such as the World Bank’s 6.4-percent projection for this year.

Meanwhile, the International Monetary Fund and the Asian Development Bank forecast full-year expansion at 6.2 percent.