The Philippine economy may likely outperformed pessimistic forecasts for the third-quarter following the the sterling performance of the manufacturing sector, First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said in a joint report.
In the October issue of the Market Call, FMIC and UA&P said most recent economic data suggested that the third-quarter gross domestic product (GDP) growth should dispel some of the pessimism after the imposition of stricter lockdown in Metro Manila in July to August.
In particular, FMIC and UA&P cited that manufacturing activity expanded in September, the highest in six months. Likewise, factory output sustained its three-digit pace of acceleration in August.
Moreover, both exports and capital goods imports increased by 17.9 percent and 17.6 percent in August, respectively.
FMIC and UA&P also noted that the economy added 2.6 million jobs, recovering 75 percent of the 3.4 million lost in July.
In additional, the national government’s spending also soared by 34.2 percent in August compared with the previous year.
Public spending accelerated during month mainly because of the financial assistance to households affected by the implementation of the two-week enhanced community quarantine (ECQ).
“The Philippine economic data released in September to early October somehow did not jive with the common observation that Q3 GDP growth would be very bad,” they said in a report released on Wednesday, Nov. 3.
“Surprisingly, the manufacturing sector has shown more exuberance than expected, with more than 400 percent year-on-year gains in June-August,” the report stated.
However, FMIC and UA&P pointed out that last quarter’s economic performance would not be anywhere close to the 11.8 percent registered in the second-quarter.
Meanwhile, FMIC and UA&P expect inflation to remain elevated, and possibly top five percent last month due to the lagged effect of the renewed surge in crude oil prices.
“However, we still see headline inflation to go below four percent starting December since the huge uptick in November-December 2020 wouldn’t repeat,” the report said.
Both FMIC and UA&P said the Bangko Sentral ng Pilipinas’ monetary policy should remain unchanged for the rest of the year as the central bank remains supportive of the growth imperative.