MANILA, Philippines—Barclays Capital is maintaining its growth forecast of 5 percent for the Philippines in 2011 despite the first-quarter performance settling lower than it expected.
The National Statistical Coordination Board reported a 4.9-percent growth rate for January-March, but Barclays Capital expected 5.1 percent.
Even then, the investment bank said in a research note that first-quarter GDP grew by 1.9 percent compared to the previous quarter.
This is “above expectations of 1.6 percent and compared with 0.3 percent previously,” the bank said.
“We continue to expect the BSP (Bangko Sentral ng Pilipinas) to keep [overnight borrowing] rates unchanged in June to gauge developments in inflation expectations, but to deliver another 25-basis point hike to 4.75 percent in July,” it added.
In a separate research, UBS Securities said large inventories meant for export have been behind the gaping Philippine trade deficit seen in the first quarter, which did not indicate an overheating economy.
The Switzerland-based investment research firm said the rise in imports likely represented a temporary rise in inventories, not for domestic economy reasons but because of outcomes in regional and global economies.
Data from the National Statistics Office show that the country posted a trade deficit of $3.368 billion in the first quarter, more than double the $1.441 billion recorded in the same period of 2010.
“We find surprisingly little evidence of excess in the Philippine economy,” said UBS economist Edward Teather.
“Instead, the wider trade balance is largely a function of a sharp jump in intermediate goods—imports—which implies a rise in inventories rather than booming consumption,” Teather said.
He said bigger deficit tied in with a UBS forecast for a “soft patch” in global growth based partly on higher inventories.
Teather said UBS has been expecting China—which, along with Hong Kong, has taken up a fifth of Philippines exports—to see an inventory-related economic slowdown.
“Far from suggesting an overheating economy, the Philippines’ gaping trade deficit suggests an over-estimate of demand on the part of Philippine exporters,” the economist said.