Credit Suisse sees slower growth for PH in 2011
Financial services firm Credit Suisse, less optimistic than other market watchers, lowered its full-year economic growth forecast for the Philippines to 4.3 percent from 4.6 percent.
Credit Suisse said in a new research on Asian markets that it expected growth in the region to “slow down more sharply than most expect” in the coming months.
The company also scaled down its Philippine forecast for 2012 to 4.2 percent from 5 percent.
Credit Suisse said the downward adjustment on its 2011 forecast was not large as it was less optimistic about the country’s growth compared with others’ analyses.
“This was partly because we didn’t think that that the planned PPP [public-private partnership] infrastructure projects that many were bullish about were likely to get off the ground in a hurry,” it said.
Credit Suisse added that the adjustment for its 2012 forecast was larger because it now assumed that the “less optimistic global growth scenario” would dampen remittances and export growth.
The company said Malacañang “might undershoot” its full-year fiscal deficit program of P300 billion because of slow spending.
Credit Suisse said that while underspending might have dragged down second-quarter gross domestic product growth—which was below expectations at 3.4 percent—it gave the government some space to run a more expansionary fiscal policy in the second semester.
“We do, however, think the [Bangko Sentral ng Pilipinas] is likely to edge up the policy rate by another 25 basis points or so but not until the first semester of 2012,” it said.
The company said such increase would address the need to bring policy rates closer to “normal” levels and a possible rise in inflation due to the recent spurt in global rice prices.
If global growth reverts to a recession, the so-called double dip, Credit Suisse said the BSP could always reverse the 50 basis-point increase in policy rates so far this year as well as the 200 basis-point rise in the banks’ reserve ratio.
