Better Q3 economic numbers seen

The slowdown in local output growth measured as the gross domestic product (GDP) should recover beginning the third quarter this year and remain on this path till next year, various private sector economists said over the weekend.

Also, analysts said the sustained increase in price of goods and services in the country, also known as inflation, was anticipated to register another sub-1 percent growth in October.

A sustained decline in inflation is forecast to manifest in October as the impact of base effects will continue to influence figure for such before dissipating in the last two months of the year.

Security Bank chief economist Robert Dan Roces said inflation in October could be as low as only 0.8 percent, a slight dip from the actual 0.9 percent inflation recorded in September.

“For October inflation, we estimate price growth year-on-year to be at 0.8 percent as derived from a steady trajectory of 0.2 percent month-on-month growth,” Roces said in an email.

“The slow inflation rate may be attributed to essentially unchanged price levels in rice, electricity and transport costs plus favorable year-over-year base effects. We expect inflation to remain below target until November,” he added.

ING Bank’s senior economist shared the same sentiment and forecast inflation in October to remain below 1 percent, capping price gains at only 0.9 percent.

“Supply side inflationary pressures appear benign for now with the vanguard of rice importation able to ensure stability at least in food prices. Slowing global demand should depress commodity prices, limiting crude oil-induced inflation spikes as well,” Mapa said.

“Onshore, demand side pressures may build up slightly after the successive RRR (deposit reserve requirement ratio) reductions and the Bangko Sentral ng Pilipinas’ creation of fresh peso liquidity,” he added.

At the Rizal Commercial Banking Corporation, lead economist Michael Ricafort forecast inflation at only 0.8 percent October owing to similar factors.

Jonathan Ravelas, first vice president and chief market strategist at BDO Unibank Inc., projected a 0.9 percent inflation for October as well.

Some analysts bared mixed forecasts, with some hitting the government target and others projecting a miss.

Roces indicated below-target growth in the third quarter at only 5.8 percent, lower than the target range of 6 to 7 percent.

“The ghosts of the delayed passage of the national budget for 2019 still continues to haunt economic growth as we expect third quarter GDP to rebound to 5.8 percent,” he said.

“Leading indicators suggest an otherwise unremarkable recovery for the quarter as sluggish growth in capital goods and a slowing imports sector offset gains from higher household consumption on the back of slower inflation, and a late surge in public spending seeking to play catch-up after getting derailed by the late budget,” he added.

According to him, private investments, which plunged in the second quarter, will still be a source of weakness due to external uncertainties.

Mapa, on the other hand, casted a much higher GDP growth of 6.3 percent owing to base effects, as third quarter 2018 registered its lowest growth point of only 6 percent.

“With the government flexing when it counts, the Philippine economy may post another year of 6 percent growth after picking up the pieces from the first half snafu. Significantly faster economic growth appears closer to reality now that state spending has picked up,” the ING economist said.