Economy to grow faster in Q4

December 04, 2018

Philippine economy is expected to expand 6.6 percent in the fourth quarter of 2018, bringing full-year growth to 6.38 percent, buoyed mainly by higher investment spending and a modest rebound in exports.

“Infrastructure and capital outlays and capital goods imports remained elevated and should drive faster growth in fourth quarter and beyond, with some support from improving exports,” investment bank First Metro Investment Corp. (FMIC) and the University of Asia & the Pacific (UA&P) said Monday in the latest issue of The Market Call.

Investment spending is seen to lead the gains in gross domestic product (GDP) in October to December with above 20-percent jump.

“Higher dollar remittances in fourth quarter should likewise support consumption and should somehow buffer the contractionary spending effect of inflation, unless the Bangko Sentral ng Pilipinas (BSP) allows significant appreciation of the peso,” the report said.

The think tanks said that headline inflation rates started to decline “more meaningfully” last month after accelerating to 6.7 percent in September and October.

The Philippine Statistics Authority (PSA) will release the inflation rate for November this Wednesday.

“Further normalization of good supply and prices and the 15-percent drop in crude oil prices (and the more than 20-percent drop in crude oil prices by mid-November) from its early October peak should offset the impact of the hike in transport fares,” the report added.

FMIC and UA&P further said the mildly positive performance of exports during the quarter will provide only a dent to the huge trade deficit that will show up in external sector.imports.