Japan giant Nomura raises growth forecast for hardy PH

Japan’s biggest investment bank Nomura upgraded its 2017 growth forecast for the Philippines to 6.7 percent on the back of recovering electronics exports as well as expectations of higher infrastructure spending by the government this year.

“We upgraded our GDP (gross domestic product) growth forecasts to 6.7 percent and 6.8 percent for 2017 and 2018, from 6.3 percent and 6.5 percent, respectively,” Nomura said in an April 27 report titled “Philippines: Catching up.”

Nomura’s GDP growth projection for 2017 was within the government’s 6.5 to 7.5 percent target, albeit circumspect compared to the growth posted the previous year at 6.9 percent.

The 2018 forecast, meanwhile, is below the 7 to 8 percent government target.

Nomura noted that electronics, the country’s top export commodity accounting for more than half of total sales, was “catching up with the regional upcycle, which complements already strong domestic demand.”

“There were few signs the Philippines was benefiting from the electronics export upcycle until January 2017, when electronics export growth jumped by 10.4 percent year-on-year following a 1.9-percent decline in the fourth quarter of 2016; it then accelerated to 15.9 percent in February, driven by a surge in export volumes while price effects have been somewhat more subdued than in other Asean countries,” Nomura said.

With the exception of Japan, the demand from other countries for electronics assembled here has picked up, it said.

According to Nomura, “although we forecast a moderation of the tech cycle in the second half of 2017 and a sharper downturn in 2018, we believe the economy will be relatively resilient, as the main engines of growth—private consumption and investment spending—continue to power on.”

Nomura also took positive note of the aggressive public sector spending that began this year and would continue in the years to come.

Last month, economic managers unveiled President Duterte’s growth plan, dubbed “Dutertenomics,” under the banner “Build, Build, Build” that was seen to usher in a “golden age of infrastructure.”

The government plans to roll out over P3.6 trillion in public infrastructure projects from 2018 until 2020 while also jacking up to 75 from 55 previously the number of flagship, “game-changing” projects that the administration aimed to start and complete before 2022.