The Philippine economy, as measured by the country’s gross domestic product (GDP), is likely to grow 2.5 percent in the third quarter and 4.5 percent in the last quarter of the year, according to First Metro Investment Corp. (FMIC) and University of Asia and the Pacific’s (UAP) Capital Markets Research.
GDP is the amount of final goods and services produced in a country in a given period.
“The relatively strong numbers in June and July confirm our expectation of clearly positive GDP growth figures for the second semester,” the research note said.
The FMIC-UAP said remittances of Filipino workers overseas continued to provide the country with hopes of growth as flows continued its positive streak climbing by 3.3 percent in June.
In the second quarter, the economy grew 1.5 percent from 4.2 percent in the same period last year.
The government projected GDP to grow between 0.8 percent and 1.8 percent this year.
“Exports are also likely to post positive growth in the fourth quarter due to base effects and consistently rising monthly exports as East Asia (especially China) and the U.S. Recoveries gain traction.” FMIC-UAP said.
FMIC-UAP also sees positive growth in the electricity, fast foods, retailers sales and residential property sales sectors and a “muted” inflation.
“These would tend to offset the still negative exports picture and a deceleration in National Government (NG) spending,” it said.
FMIC-UAP projected a 0.9 percent inflation rate in September; 1.7 percent in October and 2.7 percent in November.
“Inflation remains muted, as other prices other than petroleum products, have been quite stable in the last three months. The only remaining risk is for a severe El Nino to hamper rice harvest in October to November, as crude oil prices are unlikely to make a strong upward move until mid-2010,” the research note said.
For the full year, FMIC-UAP expects inflation rate of 3.3 percent. From January to July, inflation rate was 4.3 percent.
FMIC-UAP said that government tax take would improve, as the economy turns more positive in the second semester, and fiscal discipline will enable the NG to meet its P250- billion deficit target (PIA)