Philippine's GDP growth should improve in H2

GDP growth slowed in Q1 to 5.2% y/y, putting the Philippines at risk of posting its slowest annual growth in four years. However, the growth rate seems less unfavourable against the 10-year average growth of 5.3%, says Standard Chertered in a report on Tuesday.

"Domestic household consumption should continue to be supported by improving labour market fundamentals and steady remittance inflows. The unemployment rate was lower, at 6.4%, in April 2015 compared to 7% a year ago, which should boost consumer spending, particularly on discretionary items", suggests Standard Chartered. 

Remittance inflows remained resilient in Q1, despite a weak January print. Challenges in external demand may further limit the possibility of a strong rebound in GDP growth. The Philippine economy has become more reliant on exports to China and Japan, versus exports to the US and EU, in the past 15 years. Of the four markets, China currently accounts for almost half of Philippine exports, up from c.5% in 2000, notes Standard Chartered. However, a slight improvement in electronics export demand and in services exports may limit the downside to overall export growth.