PHL widely expected to miss last year’s GDP growth target

The Philippine economy definitely expanded in 2018, but not at the rate of what the Duterte administration had been eyeing, according to economists.

Faster-than-expected inflation during most of last year was the most debilitating factor that influenced growth last year.

Most economists expect the gross domestic product (GDP) to register below the government’s target range of 6.5 to 6.9 percent.

The target was revised lower from 7.0 to 8.0 percent at the start of President Rodrigo Duterte’s term.

Socioeconomic Planning Secretary Ernesto Pernia earlier said the Philippines needs to expand by at least 7.0 percent in the fourth quarter of 2018 to achieve the low-end of the target.

University of Asia and the Pacific (UA&P) School of Economics Dean Cid Terosa sees the economy between 6.3 to 6.4 percent in 2018.

“For 2018, 6.3 to 6.4 percent growth is achievable on the back of relatively strong first and fourth quarter performance,” Terosa told GMA New Online on Tuesday.

The Philippine Statistics Authority (PSA) is scheduled to release both the fourth-quarter and full-year 2018 GDP figures on Thursday, January 24.

The economy grew by 6.6 percent in the first quarter of 2018, mainly driven by government spending,  but slowed in the succeeding quarters as inflation accelerated until it reached a nine-year high of 6.7 percent in September and October.

The economy could not have improved in the last quarter of the year if not for stronger remittances and the tamer inflation starting in November.

“For Q4, 6.3 to 6.4 percent appears possible because of stronger manufacturing and remittance performance. Also, inflation was tamer in the fourth quarter,” Terosa noted.

BDO Macroeconomic Research also expects the Philippines to miss its 2018 growth target.

It pegged the 2018 GDP growth to 6.2 percent, citing the slowdown in household consumption particularly when inflation was picking up pace.

Asian Development Bank (ADB) downgraded its economic growth outlook for the Philippines to 6.4 percent from 6.8 percent.

“ADB’s revised outlook for the Philippines—from 6.8 percent in 2018 and 6.9 percent in 2019?reflects a moderation in agricultural output and exports, as well as higher inflation and continued global monetary tightening," said ADB Country Director for the Philippines Kelly Bird.

London-based Capital Economics also lowered its Philippine growth outlook to 6.2 percent in 2018 from the 6.5 percent.

“Given Q3’s weak outturn we have revised down our forecast for 2018 as a whole, from 6.5 percent to 6.2 percent,” Capital Economics said in a statement.

The third quarter GDP at 6.1 percent last year was slower compared with 7.0 percent a year earlier.

The Department of Finance (DOF) is keeping its hopes high, betting that the economy grew by close to 6.8 percent last year. —VDS, GMA News