Phl expected to sustain growth

MANILA, Philippines - The Philippine economy will likely sustain its robust growth in the remainder of the year due to the continuing improvement in domestic consumption and investment, two of the country’s biggest foreign banks said.

Standard Chartered Bank noted in a report that economic growth in the Philippines remained robust in the second quarter even as some other Asian economies slowed.

However, Stanchart said they expect growth to ease a bit in the second half of the year.

“With H1 GDP growth having reached 7.6 percent, growth looks set to reach or exceed the government’s six to seven percent target this year. We forecast 6.9 percent growth for 2013, as we expect readings for the rest of the year to taper off slightly due to unfavorable base effects,” it said.

“We see muted downside risks given the strong current account surplus and the robust domestic economy,” it added.

At the same time, HSBC analyst Trinh Nguyen said they have raised their growth forecast for Philippine GDP to 7.1 percent from 6.4 percent.

“We expect growth to accelerate towards year-end due to a rebound in external demand and supportive monetary policy,” HSBC said.

“The country’s medium-term outlook is bright thanks to prudent management and favorable demographics: inflation is benign, forex reserves are ample and external debt is falling,” Nguyen said.

But Nguyen warned that the effect of capital outflows in the Philippine economy may linger in the near term.

“The Philippines has been caught in the rush as investors exit emerging markets. But in our view it should not be lumped together with economies which are overly reliant on foreign funding to support the current account deficit and growth. The current account and the balance of payments are in surplus; and we expect this trend to continue over the next two years,” the HSBC analyst said.

“The economy expanded 7.6 percent in the first half from full-year growth of 6.8 percent in 2012. We expect a recovery in global demand to boost exports and remittances in the fourth quarter, supporting a growth rate of 7.1 percent for 2013,” he said.

“The Philippines remains one of the world’s economic bright spots. A recent improvement in fiscal and monetary policy management has reduced the external debt burden, contained inflation, and created more scope to support growth,” Nguyen added.