Infra Investment to Boost GDP Growth Above 6.5% in Q1- FMIC, UA&P

The Philippine economy is expected to expand over 6.5 percent in the current first quarter on the back of robust infrastructure spending, said First Metro Investment Corporation (FMIC) and the University of Asia and the Pacific (UA&P).

FMIC and UA&P said all indicators, except faster inflation, signal strong output expansion in the current quarter despite a high base in first quarter 2016.

“As major PPP (public private partnership) projects have commenced work and government-funded infrastructure spending rides high, the boost in construction activity should show consolidation of economic strength,” they said.

The government is ramping up public infrastructure spending to a record high PHP890.9 billion this year, or 5.2 percent of the country’s gross domestic product (GDP). It targets to raise infrastructure spending as a share of GDP to 7 percent by 2022.

The report noted that the investment-led growth of the economy will continue in the first quarter, as robust national government (NG) spending and manufacturing output gains in December should spillover into higher employment and consumer spending.

It expects capital goods imports continue posting above 20-percent gain this year, resulting from robust manufacturing output gains in the last two months of 2016.

“We have obtained empirical evidence that manufacturing volume leads investment spending,” it added.

FMIC and UA&P are also banking on the high domestic demand and exports gaining lost ground providing a boost in the economy in January to March quarter.

“Besides, the move of exports into positive territory in three of the last four months should provide further impetus to the strong domestic demand outlook,” they added.

The Philippine economy accelerated 6.9 percent in the first quarter of 2016. (PNA)