ING forecasts positive outlook for 2011

CEBU, Philippines – ING Investment Management (ING IM) Philippines expects Philippines to grow significantly in the next few years. The recent election gave President Benigno C. Aquino III a resounding mandate to initiate long-awaited reforms, which are currently underway. 

A big part of these reforms and the primary driver of growth of the economy in the next few years, is the plan to implement dramatic infrastructure projects amounting to over $10-billion. 

Over the next few years, new tollways, railways, airports, power plants and water supply facilities will be built. These in turn will result in more jobs, higher income and lower structural inflation.

Some of the economic improvements were, of course, gained over time. In fact, these achievements are now starting to be recognized. The strongest endorsement recently came from Standard & Poors, which upgraded the country's credit rating by one notch.

According to S&P, the Philippines' external liquidity profile is steadily improving and its external accounts remain robust. In other words, the country is attracting investments and has built up substantial reserves, which are clear signs of foreign investors' confidence.

Confidence is also at a record high among local consumers and businessmen. In fact, in its third quarter survey, the ING Investor Dashboard Sentiment Index for the Philippines posted a record high for the fifth consecutive quarter, ranking the Philippines considerably higher than the overall pan-Asia (ex-Japan) rating.  83% of the respondents believe that the local economy will improve in the next quarter while most perceive President Aquino's administration to have a positive impact on governance and on the economy.

"Indeed, most of our economic measures are proof positive," said Paul Joseph Garcia, Trust Officer and Head, ING IM Philippines - the Trust Department of ING Bank N.V. Manila Branch. "Inflation has moderated and is expected to stay benign in the medium term, despite a strong pace of growth of about 7% this year. More telling, interest rates have declined dramatically this year, posting new historic low levels, amidst a steady monetary policy."

On the fiscal side, the government aims to lower the deficit by half, as reforms are underway in the management of both its revenues and expenses. Consequently, the local stock market has marked new record highs as corporate earnings powered up, attracting new money both locally and from abroad.

The bedrock of the Philippine growth story has been and remains to be its consumer base of 94-million strong. With a young median age of only 25 years old, the scope of domestic consumption growth is still to last several more years. Moreover, the savings level remains elevated with the abundant liquidity, thanks to the remittances of the overseas workers, deposited short-term with the central bank, waiting patiently to be deployed in more productive areas of the economy.

"The country holds potential and promise, so the time for the Philippines is now," Garcia enthused. "Clearly, the stars are aligned for the Philippines. The economy is likely to post a higher level of growth in the next few years as various infrastructure projects are implemented with the participation of foreign investors. Along with a young and growing work force, its high savings rate will be a boon to support these worthy projects. We expect income to steadily increase for the benefit of both the consumers and corporations alike." (FREEMAN)