Philippines seen to lead Asean in growth until next year

The Philippines is expected to grow at the fastest pace among key Southeast Asian economies until next year, while the regional bloc as a whole continues to evolve into a fertile ground for investors, regional investment powerhouse Maybank Kim Eng Group said. 

Maybank Kim Eng, which shared its macroeconomic outlook in a briefing during the “Invest Asean” forum in Singapore last Tuesday, expects its six core markets in the Association of Southeast Asian Nations (Asean-6) to grow by an average 4.8 percent, compared 4.6 percent last year.

Malaysia, Thailand, Singapore, Indonesia, the Philippines and Vietnam comprise the Asean-6.

“Asean continues to grow and has momentum,” said Maybank Kim Eng chief executive Dato John Chong Chong, adding that the momentum would be driven by trade recovery, rebound in commodity prices and improving global electronics demand.

Next year, Maybank Kim Eng expects the Asean-6 to sustain an average growth rate of 5.3 percent.

Maybank Kim Eng expects the Philippines’ gross domestic product (GDP) growth to remain strong at 6.4 percent this year and 6.5 percent in 2018, outperforming the projected regional average.

The domestic economy grew by 6.8 percent last year, although this included an extraordinary boost from the presidential elections.

Among the Asean-6, the Philippines is seen to post the fastest pace of growth this year and the next, followed by Vietnam, which is seen to grow by 6.3 percent this year and 6.2 percent in 2018.

Maybank Kim Eng expects Indonesia and Thailand to grow by 5.1 percent and 4.5 percent, respectively, this year and by 5.3 percent and 4.5 percent, respectively, in 2018. Malaysia is seen to grow by 4.4 percent this year and 4.5 percent next year, while Singapore is projected to expand by a modest 2.5 percent this year and 2.3 percent in 2018.

Emerging markets in Asia, including the Philippines, are expected to continue to grow in 2017, offering opportunities for investors amid ongoing global political and market volatility. Despite considerable global political uncertainties, modest improvement in global economic momentum is expected to continue this year.

The Manulife Investor Sentiment Index (MISI) survey also showed 92 percent of investors in the Philippines indicate that the next six months will be a “neutral to good time” to invest in equities.

The top three reasons cited by those investors that favour Asian stocks were signs that market conditions are improving (53 percent), better employment situation (42 percent) and a stable market place (39 percent).

Aira Gaspar, CFA, Chief Investment Officer at Manulife Philippines said the Philippines delivered encouraging growth momentum in 2016.

“Looking ahead, we expect a continued execution of larger infrastructure spending and co-investing projects with private capital.

This will generate positive multiplier effects on employment, manufacturing, retail trade and productivity.

These factors, coupled with supportive structural reforms, would drive stronger corporate earnings and create new catalysts for Philippine equities,” Gaspar added.

Asian Fixed Income investments are expected to see a higher volatility in rate, credit and currency markets in 2017, the survey showed.

The outlook for Asian fixed income also depends on the Trump administration’s trade and fiscal policies, as well as the pace and magnitude of US Federal Reserve’s rate hike, it added.

Despite the uncertainties, Asian economic fundamentals are poised to stay stronger than other emerging markets in the year ahead.

Asia countries also enjoy stable economic growth, stronger balance sheets, and a better macroeconomic position than in previous years, the survey added.

The MISI showed that 95 percent of investors in the Philippines see the next six months as “a neutral to good time” to invest in the fixed income asset class.

“The Philippines has sound macroeconomic footing.

Its healthy foreign exchange reserves and domestic-driven economy reduce its vulnerability to external headwinds.

We expect the local central bank’s policy to stay accommodative throughout 2017 given manageable inflation outlook and positive economic growth momentum,” Gaspar added.

“In addition, our ample domestic liquidity mitigates the risk of an abrupt rise in local government bond yields.

We expect robust remittances from Filipinos working and living abroad and the growing revenues of the BPO industry will offer strong support to domestic consumption and continual domestic liquidity formation,” Gaspar said.

RIZA LOZADA