Philippines economy likely to grow at 6.4 pct in 2017, says DBS Bank

Philippines economy is expected to grow annualised around 7 percent in 2016. National Statistical Coordination Board will release the gross domestic product (GDP) data for the last-quarter of 2016 on January 26.

If the country’s economic growth comes at 7 percent in 2016, it is highly likely that the GDP growth to be around 6.5 percent in 2017 supported by stronger domestic consumption.

This week’s remittances data, which came in above USD2.2 billion, suggests that 7 percent private consumption growth might have been sustained in the last-quarter of 2016. Going into 2017, we have expected the domestic economy to cool off. GDP growth has been running at 7 percent pace since the election-related spending first provided a boost, reported DBS Group Research.

A strong inventory build-up has continued. And there have been few signs of concerns from the policymakers. Indeed, while we expect a possible policy tightening by the Bangko Sentral ng Pilipinas (BSP) early this year, BSP officials express no intention to do it for now, they added.

It is crucial is to monitor how investment growth fares this year. For now, we expect investment growth at 10.5 percent this year, after a record-high 22.5 percent in 2016. This is based on our view that there could be some de-stocking this year, which may not be a bad thing altogether from a longer-term growth sustainability point of view. If we continue to get inventory build-up rather than de-stocking, an upward revision to our GDP growth forecast seems necessary, DBS noted in its research note.