MANILA, Philippines – The Philippine economy is expected to surpass growth in most Asian nations this year, thanks to an anticipated boost from election-related spending, according to the September report of the First Metro Investments Corporation (FMIC) and the University of Asia and the Pacific (UA&P).
The forecast is made even as the National Economic and Development Authority (NEDA) chief and several economists said that the country is unlikely to hit its full year gross domestic product (GDP) growth target of 7% to 8%.
"With government spending getting into high gear, especially as the May 2016 elections come closer – and a little nudge from exports – we see the economy topping ASEAN (Association of Southeast Asian Nations) and East Asian countries' growth, except China's, with a projected full-year GDP growth of 6.2%," FMIC and UA&P said in its Market Call September issue.
Recognizing that the 2015 GDP growth is likely to be missed, FMIC and UA&P said consumer spending and election-related spending will boost the economy in the second half.
"Consumer spending is likely to accelerate with inflation down to below 1% in July and the rest of Q3, as well as election-related spending especially after the deadline for filing of candidacy falls due in October," the report said.
During the first half, the economy grew by 5.3%, from 6.2% in the same period last year.
The Philippine GDP growth in the second quarter, however, increased to 5.6% from the first quarter’s 5%, because of higher state spending.
"Despite the improvement in the second quarter growth, attaining the lower end of the official 7% to 8% growth target this year will entail an average of 8.7% GDP growth for the next two quarters," FMIC and UA&P said.
"We don’t see the economy capable of achieving this. Still, we retain our positive outlook in the second half and project full-year GDP growth of 6.2%."
NEDA Director-General Arsenio Balisacan said in September that the government will revise its full-year target. He personally saw a more “realistic” growth of 6% to 6.5% for 2015.
"OFW (overseas Filipino worker) remittances have once again proven skeptics (afraid of impact of low oil prices on Middle East economies) wrong. These should continue to expand by 5% to 6% in the second half," FMIC and UA&P said.