International finance firm Nomura raised its 2012 economic growth forecast for the Philippines from 4.6 to 5.1 percent because some factors that drove the surprising rate of expansion in the first quarter could continue through the rest of the year.
“We believe these drivers will not only persist, but will also be augmented by faster increases in private investments owing to ongoing reforms,” the Japan-based financial services company said in a research note.
The Philippines’ growth, measured in terms of gross domestic product, came to a surprising 6.4 percent in the first quarter from a year ago. Government economic managers said the first quarter figure makes the full-year growth target of 5 to 6 percent attainable.
The growth was attributed to higher government spending, strong household consumption, recovery in export earnings, and rise in private-sector investments.
Government economic managers said the increase in investments was supported partly by low interest rates and benign inflation.
These developments helped in making bank loans and production inputs more affordable, they said.
The rate of rise in consumer prices averaged at 3 percent in the first four months of the year, prompting monetary officials to expect that the full year inflation figure would fall within the target range of 3 to 5 percent.
Also, the key policy rates of the Bangko Sentral ng Pilipinas stands at historic lows of 4 and 6 percent for overnight borrowing and lending, respectively.
Nomura said some favorable economic indicators in the first quarter could persist in the succeeding quarters of the year, thereby supporting a respectable growth rate for the full year.
Its revised forecast of a 5.1 percent growth this year is within the government’s official target of 5 to 6 percent.
The government wants to reverse last year’s economic slowdown, when the Philippines grew by 3.7 percent compared with the 7.3 percent registered in 2010.
To speed up growth, the government increased spending for infrastructure and the conditional cash transfer program.
The country’s growth rate in the first quarter of the year is the second highest among Asian countries. It is only next to that of China, which posted an 8.1-percent growth rate.