MANILA – Prospects for the Philippine economy remain bright in 2016, as gross domestic product (GDP) is forecast to expand at a faster pace in the first quarter ahead of the May elections.
“We think GDP should expand at a faster pace in first quarter 2016 as the government keeps the taps open as election day nears, consumer spending still strong, especially when compared to a fairly low base in the same quarter last year,” said First Metro Investments Corp. (FMIC)-University of Asia & Pacific (UA&P) Capital Markets Research.
In the latest issue of its Market Call, FMIC-UA&P said the economy should slow down in third quarter, but resume its robust growth in fourth quarter.
It sees brighter outlook for the economy this year despite various challenges such as the weak global economy and the effects of El Niño.
“Continuing low crude oil prices, going below USD 30 per barrel (WTI) in most of January, should provide a balancing factor to expected higher food prices in the face of El Niño and election spending,” added FMIC-UA&P.
It said exports may only slightly improve in 2016 given the troubles plaguing the global economy and peso’s competitiveness undermined by the larger depreciation in East Asia and emerging markets.
“With relatively weak exports and OFW (overseas Filipino workers) remittances compared to the past, and the US (United States) economy poised to expand further, albeit at a historically lower trajectory, should continue to pressure the peso. However, we expect greater volatility since the US growth may not be linearly upward bound,” it said.
The country’s GDP grew 6.3 percent in the fourth quarter of 2015 driven by investment and consumer spending, bringing full-year growth at 5.8 percent.