S&P sees 6% PH growth on robust local demand

Despite a change in administration by midyear, debt watcher Standard & Poor’s (S&P) kept its economic growth forecast of 6 percent for the Philippines on expectations of sustained robust domestic demand.

Economists also see faster gross domestic product (GDP) growth during the first quarter of above 6 percent. The government will announce today the country’s first-quarter GDP performance.

Wednesday, the Philippine Statistics Authority (PSA) also revised upward the Philippines’ 2015 GDP growth to 5.9 percent from 5.8 percent previously.

In its Asia-Pacific Economic Snapshots report released Wednesday, S&P Global Rat   ings noted that presumptive President-elect Rodrigo Duterte’s pronouncements thus far with regards his administration’s economic agenda “focused on maintaining the previous administration’s infrastructure program via PPP [public-private partnership] as well as endeavoring to revise constitutional restrictions on foreign investment.”

“With economic policy unlikely to change significantly with the incoming President, underlying demographic trends will continue to drive growth,” S&P said.

“A growing and educated middle class will continue to be absorbed by a combination of overseas employment and a booming outsourcing industry, driving consumption and investment even as external demand remains weak,” it added.

In this regard, S&P’s 2016 growth forecast for the Philippines remained 6 percent. The credit watchdog also kept the 2017 projection of 6.3 percent. Last month, S&P raised its growth forecasts for the country for this year and next year from 5.7 percent and 5.9 percent, respectively.

The government’s growth goal for 2016 is within the range of 6.8-7.8 percent.

S&P, however, pointed to external growth risks in both the financial and real sectors. “Persistently low oil prices, despite helping the goods trade balance, pose a tail risk of sharply reducing demand for overseas Filipino construction workers in the Middle East—a major source of remittances,” S&P said.

The latest Bangko Sentral ng Pilipinas (BSP) data showed that cash sent home by Filipinos overseas during the first quarter grew 4.4 percent year-on-year to $6.3 billion, a slower increase compared with the 9.8-percent growth in remittances posted in the first three months of last year.

Cash remittances were projected to grow 4 percent this year after reaching a record $25.8 billion last year.

Separately, French corporate and investment bank Natixis’ economist Trinh D. Nguyen said they expected first-quarter growth at 6.7 percent, faster than the 5-percent expansion a year ago.