MANILA, Philippines - The economy likely grew in the third quarter as robust domestic demand wiped out the continued decline in merchandise exports due to weak global demand, DBS said in a report.
Gundy Cahyadi, economist at DBS, said the country’s gross domestic product (GDP) likely expanded at a faster pace of 6.3 percent in the third quarter from 5.6 percent in the second quarter and five percent in the first quarter.
Cahyadi said robust private consumption eased the steep fall in export earnings last September due to the global economic slowdown.
“Exports growth was disappointing in the third quarter, but the main support for the economy is domestic demand. On this front, we remain quite positive – private consumption growth is still on track to reach six percent this year,” he said.
Data from the Philippine Statistics Authority (PSA) showed the country’s total exports plummeted 24.7 percent to $4.4 billion in September from $5.85 billion in the same month last year. This was the steepest fall since the country recorded a 27 percent plunge in export earnings in September 2011.
For the first nine months, the country’s merchandise shipments contracted 6.9 percent to $43.75 billion from last year’s $46.97 billion.
Cahyadi said, investments growth has remained healthy at four percent since 2012 despite the expected slowdown due to the presidential and national elections scheduled in May next year.
“Ahead of next year’s elections, there are concerns that the pace of project completion may slow down. Still, we reckon that chances are high that we are going to see close to double-digit again this year,” the economist said.
DBS sees the country’s GDP growth slowing down to 5.7 percent this year from last year’s 6.1 percent due to weak global demand and low of government spending.
The investment bank has lowered its GDP growth forecast twice from the original projection of 6.3 to six percent and then to 5.7 percent.
In the first half, the country’s GDP growth eased to 5.3 percent from 6.4 percent in the same period last year.
Economic managers penned a GDP growth of between seven and eight percent for this year.