Philippine Q2 GDP won't be stellar, says analyst

Posted at 07/21/14 1:27 PM

MANILA, Philippines (UPDATE) – Philippine economic growth in the second quarter won't be "stellar," an analyst said.

Tristan Valerio, an analyst at Lucky Securities, said it is unlikely that gross domestic product (GDP) in the second quarter was able to rebound from a disappointing first quarter, which was the country’s slowest annual growth since the fourth quarter of 2011.

“I think it’s going to be just the same and in line with what the government expects. I don’t think it’s going to be stellar,” Valerio told ANC on Monday.

The Philippine economy grew 5.7 percent in the January-March period from a year earlier, significantly lower than the 6.3 percent in the fourth quarter of 2013 and 7.7 percent in the first quarter of that year.

Last week, another typhoon devastated southern Luzon and Metro Manila, but Valerio said its effects may have minimal impact on the economy.

Valerio also believes that the Bangko Sentral ng Pilipinas won’t raise interest rates, which he said is a “drastic move” for the central bank.

“Inflation is a concern for the market and for the country as a whole, it’s weighing down on foreign money coming in. So if I am a foreigner, I would think twice because three years ago inflation rate was at 2 percent and now it’s something like 4.5,” he said.

“They’re going to do it in other ways. Recently, they raised the minimum reserve requirement ratio, something like that. Something not as drastic as raising interest rates,” he added.

Valerio also noted that while GDP data is not yet released, investors will be on a “wait and see” mode.

“The trade last week was a bit of a non-event for me because everyone was just waiting for data to come in. If volume starts to pick up this week, then maybe we can see sort of where this market is going to head in the next two to three months,” he said.

He also expressed optimism that the Philippine stock market can sustain 7,000 levels as long as no negative “global event” occurs.

“If something like that happens, then we’re going to have problems. The reason why we’re here is because of foreign money and if something global happens, that money will go out,” he said.