Consumption leads surprise strength in Q2 GDP for Philippines

MANILA - Q2 GDP growth in the Philippines has surprised on the upside, with above-trend growth in consumption, aided by election-related spending, propping up overall growth. While the outlook on goods trade is still weak, the continued strength in services exports has led to a narrow surplus in services net balance.

In a research note, ANZ Bank says it is maintaining its 2016 GDP growth forecast at 6.1% y/y because growth is likely to ease in H2 2016.
“We are closely watching the evolution of the 2017 Government budget,” the note says. “While the increase in infrastructure spending is growth positive, the outlook for revenue collection is critical in assessing the risks around credit ratings.”
For Q2, growth in consumer spending rose to 7.3% y/y and the deficit in goods trade narrowed even as growth in goods imports rose 22.9% y/y from 21.5% in Q1 2016. Trade in services switched to a narrow surplus on the back of higher growth in services exports.
From the production perspective, the agricultural sector contracted by 2.1% y/y, an improvement from 4.4% y/y contraction in Q1. Growth in the industrial sector eased to 6.9% y/y from 9.0% in Q1. Growth in the services sector picked up the slack at 8.4% y/y, driven by a strong pick up in trade and repair. www.live.anz.com (ATI).