UBS SECURITIES has revised upward its 2010 growth forecast for the Philippines to 7.3 percent from 5.5 percent after a strong showing in the first semester.

But in its latest paper on the Philippines, the Switzerland-based investment research firm said it has also adjusted downward its growth forecast for 2011 to 4.4 percent from 4.6 percent on account of the unfolding slowdown in exports.

?Nonetheless, the Philippines should see a shallower slowdown than its more export-exposed Southeast Asian peers Singapore, Malaysia and Thailand,? said UBS economist Edward Teather, who prepared the report.

Documents from the National Statistics Office showed that the double-digit growth in exports slowed to 33.4 percent in June from 37.3 percent in May.

Also, Teather said the Philippine monetary environment was expected to ?remain credit friendly [as] policy rates appear too low on a medium-term basis.?

The Bangko Sentral ng Pilipinas has kept key rates at historic lows, with the borrowing rate maintained at 4 percent and the lending rate at 6 percent.

?But recent inflation momentum, slowing activity growth and a nascent credit cycle all give the [BSP] the ability to move gradually on policy tightening,? Teather said.

He added that rising policy rates should, in turn, help facilitate the deployment of excess savings within the country.

Teather said such development might lift investment levels which, basing on data related to gross domestic product growth in the second quarter, appeared to be starting already.

Last month, the National Statistical Coordination Board said that GDP grew higher than expected at 7.9 percent, even surpassing the 7.8-percent growth in the first quarter.

?Improved investment rates should improve domestic income formation and reduce reliance on still healthy remittance flows,? Teather said.

As of the first semester, remittances from overseas Filipinos have reached $9.06 billion, up 6.9 percent from $8.48 billion a year ago.

The BSP projects that full-year remittances would rise 6 percent to 8 percent from last year?s $17.3 billion.

Teather said that, notwithstanding the slowdown in exports, the most prominent risks to the Philippine situation were rising inflation and a deterioration in public finances.

?However, in our view, these risks will not manifest themselves in the near term?leaving the Philippine economy in a relative sweet spot for now,? he added.