Metrobank unit sees 6% Phl growth

MANILA, Philippines - The research arm of Metropolitan Bank and Trust Co. has retained its full-year forecast for Philippine economic growth at six percent amid the expected pickup in government spending in the second half.

“Research still expects full-year average GDP (gross domestic product) growth to come in to at least six percent amid expectations that construction will post faster growth in the second half of the year as infrastructure spending picks up,” according to the bank’s Economic Weather Report published yesterday.

For next year, Metrobank Research expects higher public and infrastructure spending to boost growth.

The economy expanded by 6.4 percent in the second quarter, faster than the 5.6 percent recorded in the first three months of the year. However, the first-half average of six percent is still below the government’s 6.5- to 7.5-percent goal for the year.

“Risks to the domestic economy nonetheless remain amid the likely triple-dip recession in the Euro area, slowing Chinese economy, looming domestic power crisis, and volatile financial markets,” the report said.

The strong economy is expected to be supported by a stable inflation as the rate is expected to fall within the Bangko Sentral ng PIlipinas’ three to five percent range this year following the easing of port congestion, earlier blamed for the soaring food prices due to the late delivery of goods.

 “Inflation is expected to remain stable until the end of the year and will come in within the BSP target range amid the easing of port congestion woes and lower global oil prices. Nevertheless, the upcoming holiday season will lend support to food prices, but this may be tempered by softer oil prices,” Metrobank Research said.

 “The impending hikes in electricity rates due to tight supply could contribute to faster increases in consumer prices next year. Nevertheless, the expected softening of global commodity prices and a stable peso could dampen the upward inflationary pressures,” it said.

Inflation decelerated to 4.4 percent in September from 4.9 percent in August and in July. The year-to-date average stood at 4.4 percent, above the midpoint of the BSP’s target range.

The central bank earlier this year raised key policy rates by a total of 50 basis points to ensure inflation will remain within the target band for this year and the two to four percent range in 2015.

“Research thinks the BSP will keep the policy rates steady until yearend on easing inflationary pressure and slowing domestic liquidity growth,” Metrobank Research said.

The BSP’s policymaking Monetary Board has two rate-setting meetings left this year, on Oct. 23 and on Dec. 11.