UK bank raises PH growth forecast for PH
MANILA - British bank Standard Chartered has raised its growth forecast for the Philippines, citing a positive economic outlook and stronger investment-led growth.
In its latest Global Research Report, the bank said it expects the Philippines to hit a gross domestic product (GDP) growth of 7.2 percent this year, up from its initial forecast of Philippine growth at 6.9 percent. The earlier forecast was made in June this year.
Standard Chartered said the country’s investment-grade status is boosting investments in the country and contributing to its growth. The bank also said domestic consumption, the main driver of the country’s robust GDP growth, remains strong.
“Domestically oriented sectors are likely to remain strong for the rest of 2013 and 2014. We are particularly positive on the major services sectors—wholesale/retail trade, financial and business services—and construction. Manufacturing may also benefit from a government focus in the budget and a rebound in external demand, in line with recent industrial production trends,” the bank said.
External demand is also seen to improve in the second half of the year, as export growth recovery “is likely to support domestically led growth” in the second half of the year up until next year, the bank said.
The bank also raised its forecast for next year’s growth at 6.7 percent, higher than the previous forecast of 6.3 percent. It also expects growth to recover in 2015 with a forecast of 7 percent. Standard Chartered said it expects more public-private partnership projects to be implemented in 2014 and 2015.
The bank said the Bangko Sentral ng Pilipinas (BSP) is “unlikely to put the brakes on growth” as it is seen to keep its policy rates steady for the rest of the year, and will only raise its rates next year, due to well-anchored inflation expectations.
“In line with our favorable economic outlook, we expect the BSP to keep policy rates steady at 3.5 percent for the rest of 2013, hiking by a total of 50 basis points to 4 percent in the first half of 2014. Risks to our forecast arise from the pace of the pickup in inflation and the Fed’s tapering timeline,” Standard Chartered said.
The bank’s expectation for inflation is at 2.9 percent for this year, 3.9 percent next year and at 3.5 percent in 2015.
Standard Chartered also revised its growth forecast for the country’s current-account surplus from 3.3 percent to 4.3 percent of GDP. The current-account surplus increased to 4.2 percent of GDP in the first half of the year, up from 2.8 percent last year.