Philippine growth misses forecasts as spending eases

Bloomberg

The Philippine economy expanded less than economists forecast last quarter as government and consu-mer spending weakened. Stocks and the peso fell.
Gross domestic product increased 6.4 percent from a year earlier, the Philippine Statistics Authority said in Manila on Thursday, after expanding 6.6 percent in the fourth quarter. The median estimate of 14 economists surveyed by Bloomberg was for growth of 6.7 percent. Compared with the previous quarter, GDP rose 1.1 percent compared with the 1.5 percent economists had forecast.
The slowdown in government spending signals that President Rodrigo Duterte is struggling to kickstart his ambitious $180 billion infrastructure plan, which the World Bank has said would be the main driver of economic growth this year and next. While expansion is still among the fastest in the world, it is the weakest since 2015.
“It is casting a shadow of doubt on the growth momentum, but it can easily be remedied if the government spends,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila. “Investors are also looking at the tax bill as the next milestone, because you need funds to pay for these projects.”
“The headline number was a little bit disappointing but we have expected some normalization of economic growth, which is not necessarily a bad thing as it minimizes the overheating risk in the economy,” said Gundy Cahyadi, an economist at DBS Group Holdings Ltd. in Singapore. “Government spending was slow; there is a need to accelerate spending to bolster growth.”
Consumer spending, which makes up about 70 percent of GDP, gained 5.7 percent from a year earlier.