CEBU, Philippines - The Year of the Water Snake is forecasted to be a year of transition for both the global and Philippine economy, a transition towards a stronger growth come 2014.
This bullish projection was made by the Standard Chartered Bank (SCB), an international bank that provides a wide range of products and services for personal and business customers across 68 markets.
SCB assistant vice president Harold Brian Loseo Tan presented the bank’s forecast for the year 2013 during an economic briefing that was organized by Autowelt Inc. and attended by local industry players.
He said that global recovery is projected to happen in reality contrary to perceptions that US and Europe recoveries are weaker than normal, Asia is becoming much more important player, and the recovery could just be in an average level.
In factual views, however, he said that global growth is expected to accelerate in the 2nd half of the year at 2.8 percent with US and European economies placing a firmer footing from its recovery in the first quarter and an emerging Asia continuing to recover initially led by China.
He added that for the Philippines, the Gross Domestic Product is projected to grow to 5.8% this year and shall increase to 6.2% in 2014.
Tan also shared the same projection along with other economists that the peso will hit P39 to the US dollar by yearend.
He said that the country could anticipate a modest increase on consumer spending while government expenditure may gradually accelerate.
He added that a gradual growth could be anticipated in terms of inflation which may average to 3.9% in 2013 from 3.2% in last year.
Although inflation pressures are likely to be muted, he said that more investments shall come in that could provide additional financial returns for the Philippines from a potential upgrade to investment status in 2014.
He further noted that Philippines development plan for 2011-2016 that involves an estimated US$120 billion of investments is also expected to accelerate this year.
He cited the Philippine Stock Exchange index (PSEi) breaching the 6,000 level last month for the first time.
While Asian local currency bonds are found to still be attractive in the market along with US and European, Tan said that equities still offer the best value in terms of dividend yield that is higher than bond yields in major equity markets.
He noted that in the 2012 market performance, equities outperformed other asset classes at 16.13% performance rate and corporate high yield boosts bond returns while cash lost purchasing power at 0.82% and commodities posted virtually flat on the year.
According to Tan, such growth of the Philippine economy could be attributed to strong peso association, good governance, transparency of the current administration, foreign investments, and influx of funds.
He added that the bank’s confidence for the vibrant economic growth is also fuelled by the increased participation of Filipinos in the stock market, continued remittance flow from Overseas Filipino Workers and the industry’s shift to the manufacturing sector.
“If we are to be optimistic, we will get the investment upgrade this year but if we have to be realistic, it will happen next year. The growth comes from us but we can’t deny we have US and Europe to help us. Nevertheless, 2012 was different and so is now for 2013. The Philippine economy will still continue to grow as we expect further transition coming as we lead the way,†Tan concluded. —(FREEMAN)