HSBC says growth drivers remain strong for second half

HSBC Global Research, the research arm of Hong Kong and Shanghai Banking Corp., said the local economy’s fundamental drivers remain solid.

Commenting on the 7-percent gross domestic product (GDP) growth for the second quarter of the year and the 6.9-percent expansion for the first half, HSBC Global Research noted that strong private consumption, supported by election campaign spending, and government infrastructure spending fueled the country’s economic growth at a faster pace.

“The second quarter GDP print is yet another reminder that the Philippine economy is dancing to a very different tune, compared to the rest of the region,” HSBC Global Research said.

“The election impact will fade out in the second half of 2016, and base effects will turn less supportive [infrastructure expenditure started to take off in the second half of 2015], but the fundamental drivers of growth will nonetheless remain intact,” it added.

Year-on-year, private consumption increased 7.3 percent and government spending grew 13.5 percent.

The bank’s research arm expected private consumption to remain resilient with the robust growth in remittances, while government infrastructure spending will continue to boost employment in construction and other related sectors.

“Moreover, despite concerns about long-term growth, BPO employment remains a key driver of employment expansion for now,” it added.

However, HSBC Global Research said the agriculture sector should be given focus, as it employs a large number of the workforce and output of this sector weighs heavily on inflation.

The agriculture sector contracted 2.1 percent in the second quarter.