Citi keeps 7.3 pct GDP forecast for PH
MANILA, Philippines – Citi Research maintained its Philippine growth forecast of 7.3% this year, despite a recent spate of calamities that hit the country.
"We retain our 2013 GDP growth forecast of 7.3% although recent economic indicators in Q3 underscore upside risk," Citi Research said in its latest report. Among the factors cited were the "positive exports surprise" in August, strong purchasing power of overseas Filipino workers (OFW) remittances, and buoyant fiscal spending.
"Following strong August exports, we see Q3 exports could rise by 7.3% year-on-year to snap out of two straight quarterly declines. Higher net export contribution to Q3 GDP of 2.4% could be the potential GDP impact. Lacking upside symmetry for imports, the higher net export contribution could yield Q3 GDP growth
of 8.8% year-on-year," it said.
The report said among the export products that performed well in August are ignition wiring sets, woodcrafts and furniture, chemicals, and processed food and beverages.
Non-chip, tech products exports like electronic data processing equipment also fared well, offsetting the decline in exports of semiconductor devices.
A weak peso in July and August helped the real peso value of OFW remittances to rise. Citi noted the weak peso in July and August, along with sustained disinflation in the third quarter, allowed the real peso value of OFW
remittances to rise by 9.1% in August.
Public outcry against alleged misuse of pork barrel funds, meanwhile, has led to a broader investigation of lump sum funds in the budget.
However, Citi Research noted downside risk may come from weak farm output due to agricultural damage caused by typhoons and monsoon rains as well as losses incurred due to the Zamboanga siege in the third quarter.
"Close to P4 billion of budget resources were pledged for
rehabilitation/relief in the affected areas to partially offset foregone regional GDP," it said.
Citi added that the third quarter GDP growth “may probe 8% despite these shocks,” when money supply eases.