Asia expected to remain the world’s growth engine

Emerging markets in Asia, including the Philippines, are expected to continue to grow in 2017, offering opportunities for investors amid ongoing global political and market volatility. Despite considerable global political uncertainties, the modest improvement in global economic momentum is expected to continue this year.

The Philippine economy saw robust growth in 2016 that was driven by strong private consumption and fixed investment.

In the third quarter of 2016, GDP grew 7.1 percent from the same period of last year, the fastest expansion in over three years.

It is expected that the Philippine economy will continue its strong performance delivered in 2016 and keep its upbeat economic momentum this year.

2017 will be a year of volatility as investors may see a gradual rise in inflation, flatter yield curves and higher US interest rate.

In advanced economies, long-term interest rates are expected to stay low this year, whereas in Asia, growth and strong fundamentals could present opportunities to investors.

Southeast Asia could perform relatively better given that its economies are driven largely by domestic consumption and policies, as was observed in 2016.

Although Asian stock earnings were soft in recent years, earnings could be revised upwards in 2017 as economic environment has improved, supportive fiscal and monetary policies have been implemented.

The Manulife Investor Sentiment Index (MISI) survey revealed that 92 percent of investors in the Philippines indicate that the next six months will be a “neutral to good time” to invest in equities.

The top three reasons cited by those investors that favor Asian stocks were signs that market conditions are improving (53 percent), better employment situation (42 percent) and a stable market place (39 percent).

Aira Gaspar, CFA, chief investment officer at Manulife Philippines, commented, “The Philippines delivered encouraging growth momentum in 2016. Looking ahead, we expect a continued execution of larger infrastructure spending and co-investing projects with private capital. This will generate positive multiplier effects on employment, manufacturing, retail trade and productivity. These factors, coupled with supportive structural reforms would drive stronger corporate earnings and create new catalysts for Philippine equities.”