Q2 GDP figures to be announced tomorrow (August 30)
MANILA - Philippine economic growth probably lost momentum in the second quarter from January/March, a Reuters poll showed, dragged by weak farm output and a slump in electronics exports as global demand slackened.
Seasonally adjusted gross domestic product in the April to June period may have expanded by 1.1 percent from the first three months of the year, down from the previous quarter's 2.5 percent which was a two-year high, the poll showed.
From a year earlier, the Philippines economy probably grew 5.7 percent, weaker than the first quarter's 6.4 percent surge. The growth estimate is stronger than Thailand's 4.2 percent and Malaysia's 5.4 percent in the same period.
Economists have previously predicted the Philippines would not be able to sustain its better-than-expected economic growth performance in the March quarter due to faltering demand from Europe, the United States and China.
But full-year growth is still likely to meet the government's 5 percent to 6 percent growth goal, with the Reuters poll showing a median forecast of 5.3 percent, higher than the previous year's 3.9 percent.
"The first quarter number was extraordinarily strong as it was boosted by a special factor -- electronic export rebound as Philippine semiconductor exports are tied-in to Thailand's electronic exports," said Sanitarn Sathirathai, economist at Credit Suisse in Singapore.
"Without such special factor in the second quarter, together with slower global growth, Philippine export growth saw a marked slowdown and this should partly dampen sequential GDP growth," he said.
Exports, which account for about two-fifths of GDP, slowed sharply in June from a year earlier, as global demand sputtered, with electronics shipments posting its third consecutive month of decline in June.
While exports of non-electronics products have taken up some of the slack, economists doubt the trade could be sustained in coming quarters with the outlook for global demand still dim.
Farm output, equal to a fifth of the Philippines' GDP, grew 0.9 percent in the first six months of the year, sharply lower than previous year's 5.48 percent growth. But officials remain hopeful an anticipated record rice harvest would help the sector meet its year-end growth target of 4 to 5 percent.
Economic Planning Secretary Arsenio Balisacan has said the country will likely meet, if not exceed, its 5 to 6 percent growth target this year, as strong domestic consumption is expected to outweigh weakness in exports.
Money sent home by Filipinos working and living abroad, which fuels domestic consumption, hit a new peak of $1.81 billion in June, bringing total remittances in the first half of the year to $10.1 billion, up more than 5 percent from last year.
Government spending, up 15.2 percent in the seven months to July from last year without interest payments, is also expected to boost growth this year and shield the economy from global headwinds.
The Philippine central bank, which next meets on September 13 to review policy, cut its overnight borrowing rate by a combined 75 basis points in January, March and July to a new low of 3.75 percent to fortify the country's monetary buffer.