GDP growth sustained above 6%

PHILIPPINES - In Brief 24 Jan 2019 by Romeo Bernardo
Government announced today that 4Q18 GDP grew 6.1%, a little below the median 6.3% analysts’ forecast. The headline rate reflects slower domestic demand growth alongside a smaller drag from net exports. The two are related: the former was pulled down by lower investments in durable equipment, mainly automobiles, with import numbers also showing decline in car imports (likely due to advanced purchases made late last year ahead of the imposition of higher automobile sales taxes). Other domestic demand components grew at a relatively healthy clip (see Table), including public and private consumption and construction. Services exports continued to disappoint, with unimpressive BPO sales growth compounded by declining tourism receipts. Production numbers meanwhile showed agricultural output rebounding from 3Q18’s decline, manufacturing output continuing to register low growth (3.2%) and services growth decelerating.Government also revised downward its 3Q18 GDP estimate, bringing the full year average to 6.2%, compared with our 6.3% forecast for 2018. Given today’s numbers, we do not expect any appreciable change in our 2019 GDP forecast of 6.2%. We are currently preparing our outlook report extending forecasts to 2020.TABLE 1Source: Philippine Statistics Authority (PSA)CHART 1Contribution to Growth (Production)Source: Philippine Statistics Authority (PSA)CHART 2Contribution to Growth (Spending)Source: Philippine Statistics Authority

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