Standard Chartered sees RP growing 3.3% this year

MANILA, Philippines - British banking giant Standard Chartered Bank (SCB) expects the Philippine economy to grow 3.3 percent this year and four percent in 2011, a top bank executive said.

SCB regional head for research for Asia Nicholas Kwan said their 2010 outlook for the Philippines “was a bit conservative,” adding that there a lot of “uncertainties” related to the national elections in May.

Kwan added that the peso is expected to strengthen to 43 to the dollar by the end of the year, although it will hover in the 46 to 46.50 range in the first semester.

He said the peso would simply track the movement of the dollar, which is forecast to remain weak for most of 2010.

He added interest rates will move up by a maximum of 50 basis points on a quarterly basis, most likely starting in the third quarter or after the national elections.

“The central bank (Bangko Sentral ng Pilipinas) will not tighten in a big way,” Kwan said. “It will likely raise rates by 25 basis points in the third quarter.”

Gross domestic savings for the Philippines is expected to expand by a little over 20 percent, and money supply by 10 percent.

The United States has the lowest savings rate of between 15 to 16 percent followed by the United Kingdom with over 17 percent. In Asia, the Philippines has the lowest savings rates compared to the Asian average of a little over 30 percent.

China displayed over 50 percent, followed by Singapore, Malaysia, Thailand, India, Hong Kong and Korea.

The foreign bank said that the Philippines is expected to fare well among the Asian nations, with China, India, Vietnam and Indonesia leading the field.

The SCB regional head said Asian nations with big population and strong domestic consumption and less dependent on trade perform well in 2010.

In fact, the Philippines recorded the highest share of consumption in terms of share in GDP, followed by Vietnam and Indonesia.

The challenge for the Philippines, however, is how to attract long-term investments from the private sector, both domestic and overseas.