Philippines GDP growth pegged to hit 7.3%

Can it bear the brunt of Haiyan's whip?

According to DBS, it predicts 3Q GDP at 7.3% YoY, bringing year-to-date growth to 7.5%. Export growth has bottomed out in 1H and provided an extra boost on top of the robust domestic demand.

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Recent import data have been coming in pretty decent, surprising to the upside with the 7.2% YoY showing for September.

Strong demand of intermediate goods persists, suggesting that local firms are gearing up for stronger export growth towards the year-end. Industrial production has also turned around, back to averaging close to double-digits in 3Q.

Meanwhile, overseas foreign workers remittances have also continued to grow modestly, at 6.2% YoY in 3Q. Gross fixed capital formation (GFCF) is likely to continue posting solid growth in 3Q.

A construction-led investment growth remains prevalent in the economy, as the economy is still undergoing an infrastructure overhaul.

Some moderation is definitely on the cards given the high base effects from 2012, but we look for overall GFCF growth to remain circa 8-10% YoY in 3Q. This is likely to persist as we go into 2014.

The big question is on the outlook going forward, following typhoon Haiyan. Until more details are available, we maintain our 7.0% YoY and 6.7% YoY GDP growth estimates for 2013 and 2014 respectively.

A stronger recovery in the global economy coupled with persistently robust domestic demand is likely to continue anchoring GDP growth momentum in the medium-term.