INFRASTRUCTURE and election spending will be the primary growth drivers in the last quarter of the year, according to local think tank First Metro Investment Corp. (FMIC)-University of Asia and the Pacific (UA&P) Capital Markets Research.

In its latest Market Call report, the think tank said the government’s big ticket infrastructure projects are being implemented with fewer impediments. These include the MRT-7, Metro Manila Subway, and the second connector expressway between Nlex and Slex, among others.

FMIC-UA&P Capital Markets Research also said the official start of the election campaign season, along with holiday spending, will lead to better GDP growth in the last quarter of the year. “We expect a further ramping up of infrastructure spending starting the fourth quarter of 2021 as election spending simmers with lineups firming up by end of the year. The economy will likely get back into its previous growth path by the end of 2022, even as inflation eases, especially in the first quarter of 2022,” the local think tank said.

FMIC-UA&P Capital Markets Research said the continuation of the government’s infrastructure program will also boost manufacturing. This will lead to a double-digit Industry sector growth while Services will also post “above average performance.”

“Investment spending in durable goods should also accelerate as firms’ earnings showed continuing improvements until the third quarter,” the think tank said.

The group added that crude oil prices have also “flattened” and will not be a threat to increasing inflation and cutting economic growth until the first quarter of next year.

The think tank said inflation will likely slow to below 4 percent in November and average below 3 percent in the first quarter of 2022.

However, FMIC-UA&P Capital Markets Research said the peso-dollar exchange rate may have an appreciation bias in the last two months of the year as overseas Filipino workers (OFWs) send home remittances in time for the holidays.

“The unexpectedly good third GDP expansion has added more optimism to firms and consumers. Initially, they had put their hopes on much reduced restrictions in Metro Manila and the faster rollout of Covid-19 vaccines, and all these should yield better fruits in the fourth quarter,” the think tank said.

Earlier, despite its being below pre-pandemic level, Socioeconomic Planning Secretary Karl Kendrick T. Chua said GDP growth is on track to attain the high end of the government’s GDP targets this year pegged at 4 to 5 percent by year-end.

For National Statistician Claire Dennis S. Mapa, in order to attain the low end of the government’s target, the country’s GDP only needs to grow 1.7 percent in the last quarter of the year. To achieve the high end of the target, the country needs GDP growth of 5.3 percent. Chua said the remaining eight months of the Duterte administration will see the government working toward making the country resilient to Covid-19.

He said the government is bent on implementing policies that will ensure the economy returns to the “path of rapid and more inclusive growth.” Cai U. Ordinario

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