PH economy likely grew 6.6% in Q4 – analyst
Credit to Author: Anna Leah E. Gonzales| Date: Thu, 16 Jan 2020 16:59:33 +0000
THE Philippine economy likely rose faster in the fourth quarter of 2019 on the back of increased household consumption and government spending, as well as an expected rebound in capital formation, according to a Security Bank Corp. analyst.
In a report on Thursday, Security Bank chief economist Robert Dan Roces said the lender forecast gross domestic product (GDP) growth to have picked up to 6.6 percent in the period.
The figure is higher than the 6.2 percent recorded in the third quarter, 5.5 percent in the second and 5.6 percent in the first. It is the same as that forecast by ING Bank earlier and higher than the 6.4 percent projected by the Union Bank of the Philippines.
“[The] capital formation meltdown was what really hurt us in the past quarter, plus delayed spending due to a delayed budget,” Roces said, referring to the four-and-a-half month delay in the approval of the 2019 budget.
“With inflation returning to the 2 to 4-percent [target range of the Bangko Sentral ng Pilipinas (BSP)] in December and the RR [reserve requirement] cuts lending increased liquidity, capital formation looks better for the quarter,” he added.
The economist noted that household consumption “was higher, especially [during] the holiday season. Government spending was also better [in the] quarter, and we expect GDP to average 6.0 percent for 2019, or the lower end of the growth target [range] for the year.”
The government aims to achieve economic growth of between 6.0 and 6.5 percent for last year.
Official fourth quarter and full-year GDP growth data are scheduled to be released on January 23.
Roces also said “inflation this year likely settled within the government’s 2 to 4-percent target range.
“For 2020, we expect inflation to remain within the target range, save some bump to the CPI [consumer price index] in the first months [of the year], due to [the] Taal Volcano’s eruption that affected industries in [southern] Luzon,” he said.
According to the economist, the BSP is expected to continue reducing interest rates, with a 25(-)basis-point (bp) cut in the first quarter, and further slash the RR in the next several quarters by at least 200 bps for 2020.