Barclays Bank has raised its growth forecast for the Philippines in 2013 to 5.9 percent from 5.6 percent, which is still lower than the government’s target range.
Following the better-than-expected growth in 2012, state economic managers are projecting a 6-to-7 percent expansion of the gross domestic product this year.
UBS Securities is more bullish about the Philippines’ growth prospects and revised its own projection to 6.3 percent from 4.5 percent.
In a new report, Barclays said the upward adjustment in its forecast was based “on the expectation of an election-related boost to growth.”
Even then, the London-based bank—in recapping the Philippines’ performance last year—said the country was “show(ing) little sign of slowing.”
The bank observed that strong remittance inflows and a strong consumer confidence supported consumer spending, one of the main drivers of the country’s growth last year.
Barclays took note of statements made by officials of the Bangko Sentral ng Pilipinas who, after the GDP data was released last week, said the strong growth confirmed the belief that the economy needed very little support from monetary policy.
“We agree, and we expect a 25-basis point rate hike in the fourth quarter,” Barclays said. “Apart from the Philippines, Malaysia is the only other economy where we are looking for a rate hike in 2013.”
For its part, UBS said the upward revision of its forecast was mainly due to the country’s strong economic performance last year.
“We had expected weaker exports to pull growth below par in the second semester of 2013 (but) instead domestic spending boomed,” UBS said in a separate report.
The UBS report, sent out from Singapore, added that “easy” financial market conditions, election spending and a recovery in global trade momentum were expected to support faster growth “in the immediate future.”