GDP in line with expectations
GDP grew by 6.3% in 4Q15, bringing the full year average to 5.8%, a notch above our 5.7% forecast for 2015. We note the following demand-side developments: 1. Growth in household consumption accelerated to 6.4% as the peso’s depreciation made up for the slower dollar remittances (1.7% vs 5.4% average for Oct-Nov). 2. Government managed to sustain a double-digit spending clip in 4Q15, with current expenditures rising 17.4% and public construction soaring 51%. 3. Investments went largely into durable equipment of all types but notably road vehicles. Private construction continued its downtrend, declining for the quarter (-0.4% yoy), likely reflecting investor caution with some segments of the real estate market experiencing oversupply. 4. The trade gap in goods and services widened substantially, an upshot of poor sales in goods exports and higher import growth to satisfy robust domestic demand growth. The production accounts showed 4Q15 GDP mainly supported by the services sector (7.4%) with industry and manufacturing adding more to output while agriculture suffered losses on account of the El Nino-induced dry spell and typhoon damages.