Resurgent growth in the final three months of 2014, from a rather tepid growth performance three months earlier, allowed some private foreign bank analysts to recast the likely growth path of the Philippines somewhat higher this year.
In separate research notes Jp Morgan and Standard Chartered Bank both expressed optimism on the country’s growth prospects, saying the Philippines can sustain its growth momentum no matter more recent structural challenges, such as supply-side shocks and the government’s reluctance to boost local output with heightened public disbursement activities.
Both were of the view the Philippines may not attain the target expansion set higher by the government to 7 percent or 8 percent this year.
In particular, JPMorgan revised its 2015 gross domestic product (GDP) growth estimate for the $270-billion economy, from 5.4 percent to 6.4 percent.
Standard Chartered, meanwhile, said it expects growth averaging only 6 percent in 2015 but with upside risks to the forecast, particularly if the government accelerates its expenditure program and more infrastructure projects move into the construction phase.
The Philippine Statistics Authority (PSA) reported just last week that the economy rebounded to growth averaging 6.9 percent after a disappointing 5.3 percent performance in the third quarter of the year.
Following the GDP release,
Socioeconomic Planning Secretary Arsenio M. Balisacan also said the 7-percent growth path seen this year remains very likely, and that the worst was over in terms of the government’s underspending.
“Growth is likely to be supported by the domestic and external sectors, with low oil prices providing additional upside. Our macro tracker for the Philippines shows that the economy has continued to benefit from solid external demand in recent months. At the same time, inflationary pressures have eased, most notably from energy,” analysts at Standard Chartered said.
“We remain confident on growth over the next few quarters, as consumption remains robust and the government is expected to accelerate spending ahead of the six-month moratorium on project approvals prior to the May 2016 national elections,” analysts at JP Morgan also said.
While the dollar was seen gaining strength toward the end of the year, the macroeconomic underpinnings of the Philippine economy were seen helping lift the foreign-exchange market and provide strength to the peso, according to Standard Chartered analysts.
“The latest GDP and trade balance figures are further evidence of the Philippines’s strong domestic fundamentals…. In line with this, we expect US dollar [USD]-Philippine Peso [PHP] to remain range-bound even in a stronger USD environment. We forecast USD-PHP at P45 in mid-2015 and P43.50 at end-2015,” Standard Chartered said.