MANILA, Philippines - The Bank of the Philippine Islands (BPI) sees the country’s economic growth slowing down this year after a stellar performance last year but enough to still attract the attention of foreign and local investors.
BPI executive vice president and treasurer Antonio Paner said the country’s gross domestic product (GDP) would likely post a modest growth of 5.4 percent this year after expanding by about seven percent last year.
Paner said last year’s economic growth was fuelled by strong election spending after the country’s successful first automated elections last May 10.
“While we’re not counting out strong back-to-back gains, (the) seven percent real GDP growth in 2010 will be very tough to sustain since aside from the fact that 2011 is no longer an election year. 2010 was coming off an unusually weak 2009 growth performance,” he stressed.
He added that this year would still be another good year for the Philippines.
“Yes we think the performance of the Philippine economy will continue to be strong. Both investor and consumer confidence continue to soar on hopes that more meaningful reforms will be carried out by the new administration to put the Philippines in a higher and more sustainable growth path,” he said.
The bank treasurer added that the country would likely outperform advanced economies as well as some of its neighboring countries in terms of economic growth this year.
“Nevertheless, we still expect Philippine growth this year to outperform most developed economies and many of our regional peers. A 5.4 percent growth will be strong enough to continue to catch the attention of both foreign and domestic investors,” Paner explained.
The country’s GDP posted a surprising growth of 7.5 percent in the first three quarters of last year from 0.7 percent in the same period in 2009. The GDP growth in the first nine months of last year was stronger than the revised GDP growth target of five percent to six percent.
The Aquino administration is confident that the target last year was surpassed as the domestic output as measured by the GDP likely expanded by at least seven percent.
The Cabinet-level Development Budget Coordination Committee (DBCC) believes that the GDP growth this year would range between six percent and eight percent.
Paner said this year’s growth would be fuelled by the projects under the public-private partnership (PPP) program of the Aquino administration as well as the renewed confidence n the country’s business process outsourcing (BPO) as well as tourism sectors.
“We expect construction and infrastructure- related industries to benefit from the favourable credit environment, sustained inflows from remittances as well as from expectations that the government’s PPP initiative will finally kick in this year,” he added.
Industries to watch out aside from tourism and BPO include construction, energy, water utilities, cement, manufaturing, and retail trade that would be sustained by strong domestic consumer demand.
He pointed out that the robust manufacturing and retail trade sectors would be sustained by strong domestic consumer demand owing to the remarkable rise in consumer confidence and very ably funded by the sustained inflows of remittances from overseas Filipino workers.
He said it would not be surprising if the country’s credit rating and credit rating outlook is upgraded by international rating agencies led by Standard and Poors as well as Moody’s Investors Service.
“We will not be surprised if rating agencies Moody’s and S&P raise Philippine credit ratings by a notch this year. Improving Philippine economic fundamentals whether from the external, fiscal or monetary front will not only get the not of the rating agencies but increasingly translate to more broad-based economic growth,” Paner said.