Q4 GDP seen at 6.5%

Given the latest GDP outlook, the central bank executive said hitting the low end of the government target remains achievable.

The likelihood for local output growth measured in gross domestic product (GDP) hitting the government’s 6 to 7 percent target remains alive as the pace of expansion was seen to accelerate in the last two quarters of the year, a senior official of the Bangko Sentral ng Pilipinas (BSP) said.

BSP Deputy Governor Francisco Dakila said hitting the midpoint of the growth target in the last quarter is possible given the anticipated acceleration in the third quarter.

“We have several models that forecast GDP…and they are forecasting a recovery in the third quarter to a range of about 5.8 percent to 6 percent. And then the fourth quarter will be stronger than that because of the acceleration in government spending,” Dakila told reporters on Friday at the BSP’s third-quarter inflation report.

“We can see the fourth quarter GDP will be closer to the midpoint of the 6 to 7 percent target,” he added.

According to him, the planned catch up in government spending which was reflected by higher disbursements in the latest report by the Department of Budget and Management was seen coinciding with higher domestic consumption in the fourth quarter, during the Christmas season.

“For the fourth quarter, a higher 6.5 percent growth figure is reachable. There will be a lot of factors like government spending and the spending during the Christmas season,” the BSP executive said.

“(Also), now that inflation is quite low, at 0.9 percent in September and in October, this will be a flip side of last year. We’re expecting inflation to be quite low. The low inflation numbers are going to provide a boost to consumption numbers, (which) will coincide with spending in the fourth quarter,” he added.

Earlier, the Philippines Statistics Authority announced growth averaging 5.5 percent in the second quarter, a slight dip from 5.6 percent in the first quarter or a significant lag behind the government target.

Given the latest GDP outlook, the central bank executive said hitting the low end of the government target remains achievable.

“(Latest GDP outlook) will imply that (for) the full year of 2019, we should be seeing a growth which is close to the lower number of the growth target band of the 6 to 7 percent for the year,” Dakila said.

Previously, Finance Secretary Carlos Dominguez III said the economic targets such as GDP growth and inflation remain on track given the increase in disbursements as of end-September.