PH seen to grow by robust pace of 7% in 2013

The Philippines is expected to post a 7-percent growth this year and stay on as one of Asia’s fastest growing economies despite the devastation caused by Supertyphoon “Yolanda” last November, according to Deutsche Bank.

For 2014, the bank said, the country’s growth could slow down slightly to 6.8 percent. Nonetheless, the economy may grow faster than other emerging markets in the region.

In its latest paper on Asia, Deutsche Bank said low interest rates were a significant driver of economic growth in many Asian countries.

Benign rates boosted consumption and led to housing booms this year, the bank said.

In the Philippines, low interest rates led to a double-digit growth in bank lending, which helped fuel consumption and investments.

With its 7-percent growth projection for 2013, the Philippines, may become the third fastest growing economy in Asia, next to China with a projected growth of 7.7 percent, and Sri Lanka with 7.2 percent.

Indonesia is expected to grow this year by 5.5 percent, Vietnam by 5.3 percent, Malaysia by 4.8 percent, India by 4.3 percent, Singapore by 3.5 percent, Hong Kong by 3.2 percent, South Korea by 2.8 percent, Thailand by 2 percent, and Taiwan by 1.8 percent.

Deutsche Bank’s Philippine growth forecast is well within the government’s own projection of 6.5 to 7 percent.

But for next year, the bank said, the interest rate environment in Asia could change because of the potential move of the US Federal Reserve to end its stimulus program. This could lead to a withdrawal of foreign portfolio funds from emerging markets which, in turn, could prompt Asia’s central banks to raise interest rates.

Higher interest rates may lead to a slowdown in consumption and dampen growth of Asian countries, Deutsche Bank added.

Still, it expects the Philippines to grow by 6.8 percent next year—coming in third after China’s 8.6 percent and Sri Lanka’s 7.5 percent.

The rest of Asia may grow by 6 percent and below.

“The Philippines would have another year of near-7 percent growth [next year], driven by strong consumption and exports,” Deutsche Bank said.

The government acknowledged that Supertyphoon Yolanda could slow down growth of the economy, but only for the fourth quarter of 2013. It expects growth to pick up next year helped up by the rise in spending for construction and rehabilitation.