The Philippine economy is projected to accelerate in the second half of 2017 better than previous quarter’s 6.4 percent, buoyed by the one-month uptick in government spending and robust consumer spending, said analysts at First Metro Investment Corp.
“To be sure, the huge uptick in government spending in May could be a one-month spike, but it does give us some confidence that NG (national government) is addressing project bottlenecks in infrastructure project,” according to the July issue of the Market Call released by the FMIC and the University of Asia & the Pacific.
Government spending on infrastructure and other capital outlays rose by 31.4 percent in May, marking a significant turnaround from April’s 21.2-percent decline.
“This, along with other initial economic data up to June, suggests that the economy should improve on its 6.4-percent GDP (gross domestic product) growth in first quarter. Fears of government underspending may dissipate…,” the report said.
Analysts believed that the government would continue to fast-track spending, especially on key infrastructure projects, as it intended to spend P8 trillion to P9 trillion in the next six years.
The report said investment spending should rise at double-digit pace starting second quarter, which had a low base, supported by manufacturing sector’s robustness and the construction sector rebound.
Consumer spending should also provide strong support to the investment-led growth, with the industrial sector’s expected pick up and inflation continuing to ease on the back of the plunge in crude oil prices.
The analysts also attributed rosier prospects in exports, which continued its above 10-percent growth trajectory in response to upgraded growth outlook for advanced economies, especially the United States, Japan and European Union.
Socioeconomic Planning Secretary Ernesto Pernia earlier projected the economy growing by about 6.4 percent in the second quarter, recording the same pace of growth as first quarter, on the back of higher government spending and robust exports.