PH seen to track higher growth trajectory

After a better-than-expected economic performance last year, the Philippine economy was likely to continue to grow at a faster pace than its trend growth in the last 10 years, economists said in various research reports.

In a paper issued after last week’s announcement that the local economy grew 6.6 percent in 2012, Citigroup said it was bullish on Philippine prospects this 2013 mainly because of the steady to rising contribution of real investments to growth and not just because of growth staying in the 6-7 percent range.

UBS revised its 2013 growth forecast to 6.3 percent from 4.5 percent and likewise upgraded its outlook for next year to 5.6 percent from 4.9 percent. “Easy financial conditions, election spending and a recovery in global trade momentum promise support to the elevated pace of growth in the immediate future,” UBS economist Edward Teather said.

Metrobank’s research team sees full-year 2013 GDP growth to remain strong—albeit slightly lower than in 2012—on base effects at 6 percent.

In a briefing on Friday, JP Morgan Philippines head of research Gilbert Lopez said his company’s house view on Philippine growth this year was upgraded to 5-5.5 percent this year but noted that this was a “very conservative” outlook. This forecast has been upgraded from JP Morgan’s earlier 2013 growth assumption of 3.5 percent for the Philippines.

The 6.8-percent growth reported for the fourth quarter was better than the consensus market forecast of 6.3 percent. The full-year growth of 6.6 percent was slightly better than the government’s target of 5-6 percent. This year, the government is aiming for a 6-7 percent growth but the medium-term goal is to move toward the 7-8 percent range.

In the last 10 years, the Philippines’ trend growth was slightly below 5 percent.

“In 2013, GDP may take a breather at the height of the political election cycle but resume its upbeat pace in second half of 2013 with real investments, fiscal spending and recovering exports figuring prominently amid a firmer global recovery,” Citigroup said, raising its GDP growth forecast to 6.2 percent from 6.1 percent.

For 2014, Citigroup said the implementation of public-private partnerships (PPP) alongside infrastructure spending and private investments could elevate real investments to 21.9 percent of GDP and support a GDP growth of 6.6 percent, an upgrade from its previous forecast of 6.4 percent.

“The Philippine economy is indeed on the road to a higher growth trajectory, surprising markets with remarkable expansions in 2012,” local banking giant Metrobank said in a research note.

HSBC economist Trinh Nguyen said growth would likely be robust again for the Philippines in 2013, although she said a growth deceleration to 4.9 percent might happen. “While export growth will likely slow, steady remittance inflows are likely to continue, supporting private consumption. Fiscal spending should also pick up, as the budget has already been allotted a 10.5 percent increase,” she said.