Philippine GDP Growth of 6.9% Beats All Economists Estimates

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The Philippine financial system grew 6.9 p.c final quarter, exceeding all estimates in a Bloomberg survey and cementing its place as one of many fastest-expanding on the earth.

Highlights of the GDP report
  • Gross home product elevated 6.9 p.c from a 12 months earlier, the Philippine Statistics Authority mentioned in Manila Thursday, after increasing a revised 6.7 p.c within the earlier three months
  • The median estimate of 17 economists surveyed by Bloomberg was 6.6 p.c
  • Growth has exceeded 6 p.c for a ninth consecutive quarter
  • The financial system grew 6.7 p.c in January to September from a 12 months earlier
  • Compared with the earlier quarter, GDP rose a seasonally adjusted 1.three p.c 

Big Picture

The Philippines is rising as one among this decade’s financial stars with the World Bank predicting development of greater than 6 p.c till 2019, underpinned by an bold infrastructure constructing program and a younger and rising inhabitants. Finance Secretary Carlos Dominguez on Thursday mentioned he expects quicker development within the succeeding quarters, whereas the central financial institution Governor Nestor Espenilla mentioned there aren’t any indicators of overheating within the financial system.

President Rodrigo Duterte has secured loans from China and Japan to badist finance $180 billion of spending on initiatives such because the capital’s first subway and a community of railways and highways throughout the archipelago. More than $50 billion of remittances and outsourcing income a 12 months helps badist client spending, and luring retailers comparable to residence furnishing big Ikea.

The central financial institution has to this point stored rates of interest at a document low however could also be persuaded to tighten coverage subsequent 12 months as forex weak point provides to strain on inflation. The peso has dropped to an 11-year low this 12 months and is the worst performing unit in Asia.

But there are indicators of a slowdown in some sectors like client spending as remittances in September dropped probably the most since 2003.

Economist Takeaways

  • “We’re firing on all cylinders and we should see further acceleration in GDP growth this quarter if the government’s infrastructure commitments are met,” mentioned Emilio Neri, an economist at Bank of the Philippine Islands in Manila. “We expect the service sector to remain strong as companies become more involved in the government’s Build, Build, Build program.”
    “Some are saying inflation is damping household consumption but the peso’s depreciation against the dollar should boost the spending power of relatives of Filipino workers overseas,” he mentioned.
  • “Today’s GDP print remains consistent with our view that the recent pick-up in headline inflation could continue next year, when we see growth rising further and the output gap – an important inflation driver – becoming even more positive,” Nomura Holdings Inc. economists Euben Paracuelles and Lavanya Venkateswaran mentioned in a observe.
    “Our baseline forecast is for BSP to hike its policy rate by a total of 50 basis points in the second half of 2018, but we see rising risks that this may be delivered earlier if recent oil price increases are sustained, which could imply second-round effects as well as inflation expectations rising more quickly given the strength of domestic demand.”

Financial Markets

  • The peso rose a seventh day to 50.895 per greenback as of midday in Manila
  • The benchmark inventory index gained zero.1 p.c

The Details

  • Consumer spending, which makes up about 70 p.c of GDP, gained four.5 p.c from a 12 months earlier. That is the slowest tempo since 2000, in accordance with information compiled by Bloomberg.
  • Government spending rose eight.three p.c
  • Investment elevated 6.6 p.c

— With help by Clarissa Batino, Ditas B Lopez, and Norman P Aquino

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