RP seen to grow 4.8% in 2010

MANILA, Philippines – Singapore-based DBS Bank Ltd. sees the economy growing faster at 4.8 percent next year from the scaled down rate of one percent on the back of strong consumption brought about by robust remittances from overseas Filipino workers (OFWs).

DBS said the amount of money sent home by OFWs would grow strongly next year as the global economy recovers resulting in higher private consumption expenditure.

“The economy will continue to plod along on the back of global recovery,” the investment bank said in its Economics Markets Strategy for Q1 2010.

The GDP growth outlook of Singapore’s largest bank is bullish than the growth range of between 2.6 percent and 3.6 percent next year from 0.8 percent to 1.8 percent this year set by economic managers through the Cabinet-level Development Budget Coordination Committee (DBCC).

“Looking beyond fourth quarter 2009, we will have the usual suspects to help the Philippines plod along,” DBS added.

It pointed out that overseas Filipinos workers’ remittances would grow by eight percent next year.

OFW remittances climbed by 4.5 percent to $14.321 billion during the first 10 months of this year compared with $13.707 billion in the same period last year. This after the BSP booked an all-time high monthly remittance of $1.531 billion in October.

The Bangko Sentral ng Pilipinas (BSP) is now looking at a four percent growth in OFW remittances to a record level of $17.1 billion this year from $16.4 billion in 2008.

The BSP was originally looking at a zero growth but later revised the outlook due to the steady deployment of Filipino workers abroad and the increase access to formal remittance channels.

DBS sees private consumption expanding by 4.8 percent next year from 3.4 percent this year. Merchandise exports on the other hand would expand by 19 percent next year after contracting by 25 percent this year.

It added that the real GDP in key remittance sources like the US, Japan, Singapore, and Hong Kong are set to expand by at least four percent next year after contracting by an average of three percent this year.

The investment bank said inflation would pick up slightly to four percent next year from three percent this year.

“With no significant demand-pull pressures, inflation will come to four percent compared to 3.3 percent this year,” DBS said.

The BSP sees consumer prices averaging between 2.5 percent and 4.5 percent this year and between 3.5 percent and 5.5 percent next year. –Lawrence Agcaoili (The Philippine Star)