The Philippine economy is now expected to grow by 5.3 percent in 2012, higher than the previous forecast of 4.2 percent, according to DBS Group.
The financial services provider said in research note the revision was due to the 6.4-percent growth rate reported for the first quarter, which was higher than the 4.3 percent that analysts had projected.
Even then, the Singapore-based group said the new forecast resulted from growth rates in the subsequent quarters going lower than that for the first three months.
DBS observed that net exports provided 5.2 percentage points to the growth of the gross domestic product for January-March amid a sharp recovery in electronics exports in the first two months.
“On the domestic front, private consumption held steady, contributing 4.7 percentage points to headline growth, while government consumption provided 2.3 percentage points,” the group said.
On the hand, DBS said inventory drawdown—as opposed to production of fresh supplies—represented the biggest negative contribution to growth.
“First-quarter numbers are certainly strong, but the weak external outlook suggests that this growth momentum will slow significantly in the coming quarters,” it said.
“In particular, the bounce in electronics exports may be largely due to a restocking cycle,” it added. “Amid risks of a further slowdown in the eurozone, the United States and China, a pick-up in final demand does not appear likely in the second semester.”
DBS said the rebound in electronics shipment might prove temporary, but that the bright spot was with the domestic sector.
The group said the government has the leeway to provide more stimulus to support the economy considering that inflation this year was likely to come in at the low end of the Bangko Sentral ng Pilipinas’ target range of 3-5 percent.
The company reiterated that with inflationary pressures coming off, the BSP’s overnight borrowing rate could be held at 4 percent for the rest of this year.
DBS took positive note of the budget deficit for the first four months, which eased to P2.9 billion on the back of a record-high month’s surplus of P31 billion in April—which gave the government fiscal room to introduce another stimulus package.