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  • Writer's pictureZiggurat Realestatecorp

GDP growth in Q2 not seen as robust as Q1–think tank

The country’s economic performance in the second quarter of the year may not be as robust as the first quarter “as employment flattened,” according to a local think tank.

In its latest Market Call report, First Metro Investment Corp.-University of Asia and the Pacific (FMIC-UA&P) Capital Market Research said GDP growth in the April to June period may be slightly below 6 percent.

The think tank noted that the large increase in the percentage of workers rendering less than 40 hours—by 9.7 percent to 44.2 percent—led to the rise in underemployment rate.

“The real economy looks poised for another robust uptick in Q2 (the second quarter), albeit slightly slower than Q1 (the first quarter), as employment flattened,” FMIC-UA&P Capital Market Research said.

“While exports remain in the doldrums, imports have plunged as well and so the trade deficit for Q2-2023 (second quarter of 2023) will likely slip from the same quarter in 2022 and may positively contribute to GDP growth,” the think tank, however, said.

The think tank added that the growth of Manufacturing based on the Purchasing Managers’ Index (PMI), now on its 16th consecutive month of expansion, bodes well for GDP growth.

Further, the double-digit increase in national government spending in April is expected to boost aggregate demand in the Philippines.

Consumption spending is expected to improve as the Bangko Sentral ng Pilipinas lowered its inflation projection for 2023 to 5.4 percent from 5.5 percent a month earlier.

Nonetheless, FMIC-UA&P Capital Market Research noted that BSP still recognized that upside risks are still present, which could prompt inflation to increase anew.

These upside risks include those coming from food supply bottlenecks, crude oil and commodity prices with the ongoing Russia-Ukraine war and other geopolitical conflicts.

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