Economists forecast Philippines growth story to continue

Economic experts are unanimous in their forecast that under the administration of President Duterte, the Philippines strong growth story will continue.

Banking giant HSBC, in a research note issued last Jan. 12, forecast a 6.8-percent gross domestic product (GDP) for this year and 6.5 percent both for 2017 and 2018.

The World Bank, in its 2017 Global Economic Pros­pects also released last week, expects sustained economic growth in the Philippines at 6- to 7-percent level in the next three years.

Debt watchdog Standard and Poor’s (S&P) also up­graded its growth forecasts for the Philippines for 2016 and 2017, as it continues to see the economy remaining an “outperformer” in the region.

Based on its Jan. 10 report, S&P now sees a 6.6-percent growth for the domestic econ­omy for 2016, and 6.4-percent output this year from its pre­vious estimates of 6.5 and 6.3 percent, respectively, based on the credit rater’s report in No­vember 2016.

In the first three quarters of 2016, GDP expanded by 7 percent, the upper end of the government’s 6- to 7-per­cent target for the year, due to strong investments and pri­vate consumption.

In the third quarter alone, domestic expansion posted a 7.1-percent print, the highest in almost three years and the strongest in the region for the period.

”Investment will likely remain robust as the government targets a 3-percent deficit in the 2017 budget, with infrastructure investment upwards of 5 percent of GDP,” the HSBC report said.

HSBC said the growth momentum was also the re­sult of fiscal space gained in recent years because of fiscal consolidation.

It added that if ever in­vestments from the US, which is the largest contributor of foreign direct investments (FDIs) to the Philippines, de­cline, this would be offset by inflows from China, which recently committed about $24-billion investments to the Philippines.

The report said remit­tances from overseas Filipino workers (OFW) would con­tinue to be a strong leg for the economy as a whole, as it is projected to grow 5 percent this year.

As of October last year, cash remittances to the Phil­ippines grew by 4 percent to $22.12 billion. The growth figure for October is already the full- year target for last year of the Bangko Sentral ng Pilipinas (BSP).

The HSBC report said recent weakness of the Philip­pines peso against the US dol­lar would boost the peso value of remittances, thus, favoring domestic consumption.

It also said that any neg­ative impact of a US poli­cy under President Donald Trump on remittances would be countered by projected im­provement of inflows from the Middle East “once oil prices start rising.”

The World Bank also hiked its projection for the Philippines in 2017 and 2018, which was forecast in June 2016 to settle at 6.2 percent for both years.

Its latest report now ex­pected Philippines GDP to expand 6.9 percent for this year, higher by 0.7 percentage points from its previous pro­jection.

Higher growth projection is likewise seen next year at 7.0 percent, up by 0.8 percentage points.

Economic-growth pro­jection for the full year of 2016 was also upgraded to 6.8 percent from its previous forecast of 6.4 percent due to higher-than-expected growth in third quarter last year at 7.1 percent.

The World Bank noted that the optimistic outlook for the economy is driven by high confidence among investors and consumers.

“Continued policy com­mitment to the planned in­crease in public infrastruc­ture spending is expected to carry the economy’s growth momentum over to 2017 to 2018,” the World Bank stated.

Moreover, the Philip­pines economy has endured the slowdown in investment growth globally and within the East Asia and Pacific.

The World Bank said in­vestment growth in the region has steadily declined from 12.1 percent in 2010 to 6.5 percent in 2015 to 2016.

The National Economic and Development Authority (Neda) estimated the econo­my has grown by 6.8 percent to 7.1 percent in the fourth quarter of last year, bringing the average full-year growth to about 7 percent.

Neda Director-General and Socioeconomic Planning Secretary Ernesto Pernia said manufacturing, consumption and investments continued to drive last quarter’s gross do­mestic product (GDP).

Pernia believes the impact of typhoons on the economy will still manifest in the first quarter of 2017 GDP figure.

Typhoons “Karen,” “Law­in” and “Niña” hit the coun­try during the last quarter of 2016.

“There is usually a lag in terms of the reckoning of (ty­phoons) damage. Some of the damages have not really been assessed yet,” he said.

The combined GDP of the 10-member countries of Association of Southeast Asian Nation (Asean) that in­cludes the Philippines is seen to surpass the GDP of big economies across the world, IHS Global Insight Rajiv Biswas said.

Biswas said the GDP of Asean is projected to hit $2.6 trillion, with economic growth expected at 4.6 percent.

The Asean GDP is fore­cast to reach $2.5 trillion for the full year of 2016.

Based on IHS Global In­sight world economic forecast, the region’s $2.6-trillion GDP this year is higher compared to India’s at $2.4 trillion, Unit­ed Kingdom’s at $2.4 trillion, France’s at $2.3 trillion, Bra­zil’s at $1.7 trillion, Russia’s at $1.5 trillion, and Australia’s at $1.2 trillion.

“The Asean region is expected to benefit from a moderate improvement in global GDP growth from 2.4 percent in 2016 to 2.8 percent in 2017, with the US economy forecast to strengthen in 2017, support­ed by the incoming Trump administration’s plans for deep corporate tax cuts and a boost to infrastructure spending,” said Biswas.

“This should provide a boost to Asean exporters as the US remains a key export market for many Asian na­tions, including Singapore, Malaysia and Thailand,” he added.

The economist cited economic developments in Indonesia, the Philippines, and Malaysia, which will fuel Asean’s GDP growth.

Indonesia, the region’s largest economy, is expected to sustain its growth at 5.0 percent in 2016 and 5.1 per­cent in 2017.

“Indonesian domestic demand is expected to be supported by the transmis­sion effects of significant monetary easing in 2016,” Biswas said.

The Philippines’s robust domestic demand as well as its strong information tech­nology and business process outsourcing (IT-BPO) sector and remittances support the rapid economic growth mo­mentum of the country, ac­cording to the economist. LUIS LEONCIO