DBS Bank of Singapore upgraded its 2016 growth forecast for the Philippines to 6.6 percent from the previous estimate of 6.3 percent, saying domestic components are “firing on all cylinders.”
DBS adjusted the forecast a day after the government reported that second-quarter gross domestic product grew 7 percent, bringing the first-half print to 6.9 percent, which was near the upper bound of the Duterte administration’s target range of 6 percent to 7 percent.
“[Second-quarter] GDP growth came in robust at 7 percent year-on-year, well above our expectations. The economy has grown 6.9 percent in first half alone, driven by a strong expansion across all the domestic components of the GDP. The impact from the May elections turned out to be way more significant than what we had thought initially,” DBS said in a report Friday.
“Even if we factor in some moderation in the second half of 2016, full-year GDP growth is now likely to come in at 6.6 percent, versus our previous forecast at 6.3 percent. That the domestic economy is firing on all cylinders was obvious enough,” the bank said.
Government data showed that private consumption grew 7.3 percent in April to June while government consumption expanded 13.5 percent. Investment growth came in at 27.2 percent.
DBS said one figure that might continue to grab the headlines was the pace of investment growth in the economy. It said investment growth averaged 26.5 percent in the past three quarters.
“The sense of optimism continues to linger in the private sector and investing domestically is still the priority for now. Besides, the new government is ready to step up its spending on infrastructure projects. Combined together, all these suggest that any overheating risk is manageable for now,” DBS said.
Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said the economic growth targets set by the government in the next few years would be highly attainable if policy reforms were sustained.
Economic Planning Secretary Ernesto Pernia said the 7-percent growth in the second quarter was an upbeat start for the current administration.
