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7% growth likely this Q2 -- Pernia

Posted on May 08, 2017

YOKOHAMA, JAPAN -- The Philippine economy stands a chance to sustain this quarter the seven percent expansion the country’s socioeconomic planning chief has estimated for the first three months, putting a 6.5-7.5% full-year target in sight.

Contributing to the economy's strength this quarter is farm output, which is expected to have grown around 2%, according to Agriculture Secretary Emmanuel F. Pin?ol. -- AFP
Ernesto M. Pernia, director-general of the National Economic and Development Authority, said in an interview last Friday on the sidelines of the 50th meeting here of the Asian Development Bank’s (ADB) Board of Governors that he remained optimistic that the first-quarter pace which the government will report on May 18 will hover around the seven percent he has cited since late March.

Asked for a preliminary second-quarter economic growth estimate, Mr. Pernia replied: “Well, it’s likely to be a repeat of the previous quarter -- also around 7%,” even as he remains watchful of risks from “weather disturbance and maybe external factors.”

The first-quarter gross domestic product report will be preceded three days earlier by the release of first-quarter farm output, which accounts for about a fourth of the country’s jobs and a tenth of national production, and which Agriculture Secretary Emmanuel F. Piñol had said in March could have grown around two percent.

Mr. Pernia shared this view, saying on Friday that “agriculture did better than the fourth quarter so it was definitely positive... there was growth” in the first quarter.

That would be a turnaround from the 4.53% and 1.11% contractions recorded in last year’s first and fourth quarters, respectively, due to adverse climate: drought due to El Niño in 2016’s first three months and storms in October-December. It also compares with the 2.5-3.5% yearly average targeted under the Philippine Development Plan 2017-2022 approved last Feb. 20.

Economists of the ADB and of the ASEAN+3 Macroeconomic Research Office said here in separate earlier briefings that any risk that will weigh on Philippine growth prospects will likely be external, particularly a faster-than-expected tightening of financial conditions worldwide in the wake of projected successive interest rate hikes in the United States and rising protectionism there and in other western economies.

Also contributing to the economy’s strength since 2017 began is a recovery of merchandise exports, which increased by 17.4% year on year to $9.973 billion in the first two months against a two percent full-year government projection, signalling a recovery of demand in key markets. Last year saw overseas sales of Philippine goods fall 2.42% to an upwardly revised $57.406 billion from 2015’s $58.827 billion against a three percent growth target for 2016.

Industry has also contributed, Mr. Pernia said, coinciding with the Nikkei Philippines Manufacturing Purchasing Managers’ Index’s relatively “solid” 52.7, 53.6 and 53.8 readings in January, February and March, respectively.

All these factors, Mr. Pernia said, add to boosts from increasing state spending as well as the anchors of services and household spending. -- Wilfredo G. Reyes