Another strong year for Philippines: GDP growth up 6.8%

MANILA - The Philippines’ GDP growth moderated to 6.6 % y/y in Q4 of 2016 compared to 7.0% in the previous quarter, giving a full-year figure of 6.8%. ANZ Bank is tipping 2017 GDP growth to rise to 6.9% on the back of increased fiscal spending.

It says the Duterte Administration’s renewed push for infrastructure is aimed at diversifying economic development away from the National Capital Region. However, such investment would require sustained strong growth in capital imports.
“Hence, we see rising risks that the goods trade deficit could balance out remittance inflows. The outlook on the current account will now depend on the growth in services trade. Over the last few years, services trade have been posting surpluses of around 1.0-1.5% of GDP.”
ANZ says moderation in growth in the quarter was presaged by the growth pullback in industrial activity in the two months to November.
“The Government also recently reported a contraction of farm output in Q4, which was in line with contraction of 1.1% in agricultural production.
“On the expenditure front, growth in household spending remained above trend at 6.3%. Total investment also delivered a strong number of 15%, having been aided by election-related spending all through 2016.”
ANZ says it still believes Bangko Sentral ng Pilipinas (BSP) will be one of the first Asian central banks to tighten policy.
“With strong domestic demand, further supported by a renewed push for infrastructure spending and rising inflation outlook, we are pencilling in a resumption of interest rate hikes by Q3,” it says.  www.live.anz.com (ATI).