Philippines 2015 growth likely at 5.5%

Q2 GDP growth for the Philippines came in marginally below expectations at 5.6% y/y, relative to our and consensus forecasts of 5.7%. Q1 GDP growth was at 5.0% y/y, revised lower from the preliminary print of 5.2% y/y. On a seasonally adjusted basis, GDP expanded 1.8% q/q. 

"Due to the lower than expected growth momentum in 1H 2015 (5.3%), growth for 2015 is forecasted at 5.5% and 2016 growth is forecasted at 6.0%. The weakness in growth from 2014 (6.1%) is largely on the back of slower than expected government spending, and also weaker external demand", says Barclays.

Overall, despite the cut in the growth forecast, Philippines is expected to continue to outperform the other Asean economies, with the country set to be the fastest growing economy among the major Asean economies for a third consecutive year in 2015. 

Post the GDP release, Economic Planning secretary Baliscan said that growth within the 6.0-6.5% range looks more realistic for 2015. The risks from weather conditions remain, but so far inflation has remained manageable. 

"While the BSP continues to sound cautious on rising market volatility, the bank is not expected to deliver any policy easing, as domestic activity remains resilient, despite poor external conditions. We recently pushed back our rate hike forecast to Q3 2016, which would be after the presidential election in May 2016", added Barclays.