The Philippines remains one of the region’s economic bright spots this year, no matter the anticipated external headwinds best indicated by the uneven pace of growth of the global economy.
However, the UK-based Standard Chartered Bank (SCB) said local output growth, measured as the gross domestic product (GDP), looks to fall below the only recently scaled-up government growth target this year.
At a news briefing in Makati City on Monday, Jeff Ng, SCB economist for Southeast Asia, forecast growth averaging 6 percent for the $272-billion economy this year, along with upside risks to their assumptions.
The economist said continued Philippine expansion, averaging 6 percent this year, should ride on the back of “anchored” plus factors helping the country ride out volatilities caused by external events.
But at 6 percent, Ng said the Philippines was likely to outpace its regional counterparts, as domestic consumption continues to drive the local economy and sustain its growth momentum in 2015.
The 6-percent growth forecast, however, fell short of the government target this year, ranging from 7 percent to 8 percent.
The SCB is one of several international lenders saying the Philippines should miss its target expansion this year no matter the optimism on most of the lead economic indicators.
Earlier this month, the Asian Development Bank projected a 6.4-percent GDP print for the Philippines this year. London-based HSBC also said forecast growth for the Philippines similarly averaging 6 percent for 2015.
Ng said there are upside factors to the country’s growth prospects this year, such that local output
accelerates and hit the low end of the government target this year. The largest factor that could push local output higher includes significantly higher investments.
Inflation, meanwhile, was seen averaging 2.2 percent this year, or in line with the Bangko Sentral ng Pilipinas’s (BSP) most recent target path for 2015.
According to Ng, inflation should remain muted throughout the year, except in the final months, when the base impact of earlier oil- price reductions begin to be felt in the price matrix.
Ng also said they expect the BSP to maintain its monetary-policy stance until September this year, before starting a tightening cycle toward the waning months of the year.
He anticipates a 50- basis-point hike in the overnight policy rate and a similar 50-basis-point increase in the special deposits account interest rate in reaction to anticipated adjustment of rates by the US Federal Reserve.