PH entering 'virtuous cycle' of growth
MANILA - The Philippines is expected to continue its growth momentum this year as the country enters a “virtuous cycle” of economic growth following good macroeconomic fundamentals and rating upgrades, an international investment bank said on Monday.
Goldman Sachs Vice Chairman for Asia ex-Japan Tim Leissner said things “can only get better for the Philippines” as the economic reforms and fundamentals increase investor confidence in the country.
The investment bank forecast a growth rate of 6.8 percent for the country this year, but a bit of a slowdown at 5.5 percent next year. The bank’s gross domestic product forecast is the second highest in the region, after China. It also said the peso would end the year at 43.50 to a dollar and would appreciate to P40 against the dollar next year.
Aside from an inflow of investments that is expected to enter the country after a consensus investment-grade rating from the three major credit-rating agencies, Leissner also said local firms are seen to venture into foreign firms as the peso strengthens.
“The currency strengthening will help the local companies go forward to go out offshore and acquire other companies and, yes, that is good news,” Leissner said.
He also said the currency strengthening is mainly driven by the very high growth rate in the country. The investment bank executive cited external risks, such as the rising US interest rates and the Federal Reserve’s asset-purchase program tapering as downside pressures to the appreciation of the local currency.
According the Leissner, the positive cycle that the Philippines is experiencing now is driven largely by confidence from the present administration.
“I think people have been impressed by the government. It’s positive how the president has managed both the
domestic affairs and also how he has managed in portraying that to the international community. When you hear anecdotes of how he speaks to our investors, how he speaks to people who are going to bring FDI into the country, everybody says the same thing, they are all impressed on how hands-on and action-oriented he is,” Leissner said.
The investment bank official also cited a young population, coupled by a strong education system and English proficiency as one of the main factors expected to keep the economic momentum afloat.
Asked about further reforms that the country needs to undertake to maintain the robust growth, Leissner said the administration just needs to “stay the course” and to “keep doing what it is doing.”
“I don’t see a bump in the road for the Philippines,” he added.