ANZ Banking Group said it maintained its estimate for Philippine gross domestic product (GDP) growth in 2019 to 6%, the lower range of the government’s target range of 6-7%, with public investment and spending unlikely to recover until the third quarter of 2019.

“We continue to expect GDP growth at 6% in 2019. Although private consumption is likely to remain firm, public expenditure and investment are not likely to recover until Q3,” ANZ said in its Asia Economic Outlook report.

“The impact of the delayed 2019 budget was apparent from a contraction in public spending as well as its attendant impact on private investment. The latter was also likely affected by rate hikes made last year. Indeed, we expect the impact from the delayed budget along with the election-related public construction ban to have extended into Q2.”

“Capital imports and government disbursements in April remained disappointing, suggest sustained weakness in public spending and investment,” ANZ said.

ANZ noted that only private consumption accelerated in the first quarter, with GDP growth only at 5.6%, due largely to the delayed passage of the 2019 General Appropriations Act (GAA).

ANZ’s forecast is below the 6.2% GDP growth posted in 2018.

However, ANZ said that a slowdown in growth could “help arrest some of the underlying imbalances in the Philippine economy” in the area of imports, credit and inflation.

ANZ said merchandise imports grew at a slower pace of 2.8% in April from 10.3% in December, based on a three-month average basis, resulting in a lower trade deficit of $3.1 billion in the first quarter compared with $4.2 billion in the last quarter of 2018.

ANZ also said the contraction in exports slowed to 0.5% in April from 1.5% in December.

“If these trends continue, the current account balance as (a share of) GDP will improve in 2019,” ANZ said.

ANZ sees economic growth of 6.2% next year.

Last week, Socioeconomic Planning Secretary Ernesto M. Pernia said that it is still possible to achieve a 6.5% GDP expansion this year due to election spending, consumption, and lower inflation.

“I would say 6.5% is attainable,” Mr. Pernia said, noting however, that growth in the second quarter is “not as strong as the third quarter would be.”

The Bangko Sentral ng Pilipinas (BSP) has revised its inflation forecast for this year to 2.7% from the earlier 2.9%. — Reicelene Joy N. Ignacio

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