Economy remains strong in Q1 – BSP

MANILA, Philippines - The economy remains strong in the first quarter due to strong household consumption, the Bangko Sentral ng Pilipinas said.

“Prospects for the domestic economy remain favorable as private domestic demand is expected to continue to deliver positive impulses to the economy, aided by sustained remittance inflows and low inflation,” the BSP said in a report.

Economic growth accelerated to 6.9 percent in the fourth quarter from a dismal 5.3-percent growth in the third quarter last year.

This brought the full-year expansion to 6.1 percent, short of the government’s 6.5- to 7.5-percent target but still the second fastest in Asia in 2014.

“Sustained and broad-based expansion in bank lending is expected to continue to underpin domestic economic activity. Improved government spending is also seen to further support domestic demand,” the BSP said.

“Capital formation should contribute to economic growth with construction and investments in durable equipment expected to remain strong,” the central bank said.

The government hopes to grow the economy by seven to eight percent this year, which is among the highest estimates in the region.

Analysts have stressed the acceleration of public spending is key to achieving this growth amid sustained expansion in the services and manufacturing sectors.

“These positive growth dynamics are reflected in the results of the most recent BSP Consumer Expectations Survey which showed improved consumer sentiment for Q1 2015 as the confidence index (CI) returned to positive territory at 0.7 percent,” the central bank said.

Respondents of the survey have said family financial conditions are expected to be “more favorable” in the first quarter and to remain stable for the year.