PHL GDP to grow above 6% in Q1 on election, infra spending – FMIC, UA&P

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MANILA – The Philippine economy is expected to post a third consecutive quarter of above six-percent gross domestic product (GDP) growth in January to March quarter, bolstered by spending related to elections and implementation of public infrastructure projects.

“We expect private election spending and public infrastructure expenditures prior to and a little beyond the May Presidential elections to provide the additional boost to the economy,” said a joint report by the First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P).

FMIC and UA&P believes that government spending continue expanding by more than 15 percent, as it has released most of the budget to the different agencies.

“Local government units’ (LGU) spending should add fuel to this, as local politicians step on the accelerator as election nears,” said the latest issue of the Market Call.

It added the headline inflation rates should average 1.3 percent in first quarter and should support consumer spending that already has election spending as a main driver.

The FMIC and UA&P noted that as the dreaded El Niño appearing to be fairly moderated in January to February, agricultural output may turn slightly positive along with robust industrial production and services output.

“It should challenge the 6.5 percent mark, especially if agriculture and exports do not pull down the two other major sectors,” they said.

The report expects exports improving slightly to the positive territory on the basis of consistent United States economic growth and Eurozone’s quantitative easing continue to boost output and employment gains in the area.