Economic Analysis - Solid Growth To Continue But Acceleration Unlikely - FEB 2018


BMI View: We have upgraded our 2017 real GDP forecast for the Philippines to 6.7%, but maintain our below-consensus expectations for growth to come in at 6.3% in 2018. Leading financial market indicators and waning reform momentum suggests that growth has likely peaked in the near-term. That said, we expect growth to average above 6% over the medium term, which is still a solid figure by regional and historical perspectives. .

The Philippine economy expanded by an impressive 6.9% y-o-y in Q317, marking an improvement from the upwardly revised 6.7% y-o-y in Q217, and bringing the cumulative growth in the first nine months to 6.7%. This belies high frequency indicators such as the business confidence index, overseas remittances, volume of production index, and capital goods import which all pointed to a likely slowdown in Q3. We have upgraded our real GDP forecast for 2017 to 6.7% (from 6.3%) on the back of the strong year-to-Q3 showing, but maintain our forecast for growth to come in at 6.3% in 2018 as leading financial market indicators and sputtering reform momentum suggest that continued growth acceleration is unlikely in the coming quarters. That said, we continue to forecast the economy to grow at above 6% over the medium term, thanks to favourable demographics trends, strong public investment drive which will help address the acute infrastructure deficit, and deepening economic cooperation with China and Japan, which should be supportive of trade and investment.

Q3 GDP Figure As Good As It Gets

Staying Below Consensus For 2018
Philippines - GDP At A Glance
Source: BMI, Bloomberg

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