2018 growth goal likely missed – poll
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Sun, 20 Jan 2019 16:25:34 +0000
The economy likely slowed as 2018 ended, analysts polled by The Manila Times said, with the full-year result lower than the previous year’s and also missing the government’s downwardly-revised target.
Estimates for the October-December quarter ranged from 5.9-6.8 percent with a 6.2-percent average, lower compared to the same period last year but marginally up from the third quarter’s 6.1-percent expansion.
Full-year estimates, meanwhile, ranged from 6.1-6.3 percent. The 6.2 percent average falls well below the lower end of the government’s 6.5-6.9 percent target for 2018 — slashed in October from 7.0-8.0 percent previously as inflation bit, the peso weakened and global economic prospects fell.
Official fourth quarter and full-year gross domestic product (GDP) growth data will be announced this Thursday by the Philippine Statistics Authority.
Moody’s Analytics economist Katrina Ell had the most upbeat view in the Manila Times poll, underscoring factors such as private consumption and imports.
“GDP growth in the Philippines likely hit 6.8 percent … in the fourth quarter … full-year GDP growth remains on track to expand 6.5 percent…,” she said.
Philstocks research head Justino Calaycay Jr., meanwhile, expects a fourth quarter result of 6.6 percent “in light of increase consumer spending during the Yuletide season aided by declining oil prices towards the latter part of the period.”
“This will bring full-year GDP to between 6.3 percent and 6.4 percent, barely scratching the lower end of the adjusted official target band,” he said.
Bank of the Philippine Islands Vice-President Emilio Neri Jr., for his part, estimated that the economy likely grew 6.4 percent in last three months of 2018, resulting in an annual result of 6.3 percent.
The likely growth drivers, he added, were rapid expansion in capital formation, a rebound in household final consumption, and a modest recovery in both agriculture and manufacturing.
DBS economist Masyita Crystallin, meanwhile, offered a fourth-quarter forecast of 6.2 percent, which likely resulted in full-year growth of 6.3 percent.
“We think private consumption might improve slightly leading to midterm election. Investment was robust, supported by government projects as fiscal policy remain accommodative,” she added.
Analysts from HSBC and ANZ Research all pointed to a 6.1-percent expansion for the last three months of the year.
HSBC said remittances stayed subdued while imports remained elevated given the government’s infrastructure push.
The banking giant also noted that credit growth was slowing as the effects of point policy rate hikes totalling 175 basis continued to ripple through to lending rates.
“This may result in lower private investment growth in Q4 (fourth quarter) 2018 compared to previous quarters,” it said.
HSBC said full-year GDP growth likely hit 6.2 percent in 2018.
ANZ Research, meanwhile, said net exports remained a significant drag on growth, with imports — particularly capital goods — outstripping tepid exports.
Nevertheless, investment activity remained robust and was a significant contributor to growth during the quarter, it added
“High frequency indicators are mixed; credit growth has weakened but auto sales have improved slightly. Along with weaker consumer sentiment, this does not bode well for private consumption,” ANZ Research said.
IHS Markit and Capital Economics analysts, meanwhile, all estimated 6.0 percent growth for the last three months of the year.
Focusing on the full-year figure, IHS Markit APAC chief economist Rajiv Biswas said 2018 growth was estimated to have hit 6.2 percent, with growth momentum remaining robust despite having moderated somewhat compared to 2017.
“The pace of economic growth in 2018 was dampened by the slowdown in export growth and a widening trade deficit, as well as the impact of rising interest rates as the BSP significantly tightened policy rates during 2018 to address rising inflation pressures,” he said.
London-based research consultancy firm Capital Economics said data on industrial production and exports suggested that both sectors had weakened over the course of the fourth quarter.
“Higher inflation will also have weighed on consumer’s purchasing power, acting as a further drag on demand,” it said.
The least optimistic was ING Bank Manila senior economist Nicholas Antonio Mapa, who expected a fourth quarter slowdown to 5.9 percent.
“[W]ith inflation accelerating past target and with the BSP rattling off a string of aggressive hikes, growth momentum will undoubtedly begin to take a hit and the slowdown may manifest again [in the fourth quarter],” he said.
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