Bank sees 1.5% economic growth

MANILA, Philippines–Local banking giant Metropolitan Bank and Trust Co. sees the economy expanding by 1.5 percent this year, aided by reconstruction efforts in the aftermath of Tropical Storm “Ondoy” and Typhoon “Pepeng.”

In the yearend economic outlook of its research department headed by Ildemarc Bautista, the banks has projected that rehabilitation efforts following the devastating natural calamities will fuel government spending.

“Personal consumption is also seen to pick up as typhoon victims start to rebuild their homes,” said the report, which was dated Oct. 9.

The report noted that the Philippines was one of the few countries in Asia to skirt recession amid the global economic downturn, posting a second quarter growth in gross domestic product of 1.5 percent after a revised first quarter growth of 0.6 percent.

It said the government’s P330-billion stimulus package and strong remittances from overseas Filipino workers supported the domestic economy.

In the meantime, the peso is seen ending the year at 46.50 to the US dollar, as remittance flows provide a buffer against jitters caused by a widening government budget deficit as well as continuing trade shortfalls.

Across the major industrial economies, the research said there was reason for cautious optimism regarding recovery as GDP growth, industrial production and trade had improved relative to previous quarters.

“Emerging Asia is spearheading the recovery, with its growth propped up by the relatively healthy state of its financial systems, fiscal and monetary stimuli that have been quickly provided by governments and central banks across the region and the rapid turnaround in its larger, less export-oriented economies,” the research said.

Metrobank added that financial indicators continued to improve as financial institutions distressed by the collapse of Lehman Brothers in September last year were now liquid and recapitalized.

“Another sign of financial stabilization is seen in rallies in major stock indices. The recovery in equities may be a leading indicator that the worst of the downturn is now over, even as stock prices remain below pre-September 2008 peaks,” it said.

But the research also pointed out that any miscalculated exit from global pump-priming efforts may lead to a prolonged slowdown and derailment of the recovery.

Heightened protectionist measures were also threatening the weak trade rebound. Furthermore, Metrobank said the sustained weakness in housing markets could also dim prospects for the global economy, while cost-push inflation may return with the resurgence in world oil prices.

“Better international coordination of policies will still be necessary to ensure that recovery does not revert to stagnation or even double-dip recession,” it said. –Doris Dumlao, Philippine Daily Inquirer