Philippines growth propped up by consumption as economy diversifies

MANILA – Philippines’ Q3 GDP came in at 6.0% y/y, shy of market expectations of 6.3%, although an upward revision to Q2 growth leaves year-to-date growth broadly as expected. But consumption growth is enjoying firm momentum despite disappointing remittance growth, supporting ANZ Bank’s our view that the economy is slowly diversifying away from its traditional reliance on remittances.

“Yet the trade recession (via income effects) and persistent failure of the Government to ramp up spending is capping growth in domestic demand,” ANZ says.

“We stand by our GDP growth forecast of 5.7% y/y in 2015 before rising to 6.0% in 2016, likely boosted by election-related spending. The Philippines will clearly remain one of Asia’s strong performers.”

Looking ahead at the forthcoming election, ANZ we believes the prudent fiscal policies of the Aquino administration will allow whoever is elected as the next President to hit the ground running, supported by a cash-rich treasury.  www.live.anz.com (ATI).