Banks, fund managers more bullish on RP

MANILA, Philippines – Banks and fund managers – key players in the financial markets – are increasingly turning bullish on the country’s strong economic prospects this year.

First Metro Investment Corp. (FMIC), the investment arm of the Metrobank Group of Companies, said economic growth in the third quarter of 2010 will likely remain robust, hitting about six percent.

“The mutiplier effects of the fast gross domestic product (GDP) growth in the first half of 2010 are likely to carry over into third quarter, at above six percent. Construction, mining and manufacturing should remain robust,” it said in a report.

It added that exports will continue to rise at a double-digit pace in the third quarter since China, East Asia and the ASEAN bloc are now leading the Asian region’s growth.

Earlier, Standard Chartered Bank (SCB) said the Philippines has emerged one of the best economies so far in the region, training only China, India and Indonesia.

The British bank is forecasting a GDP growth of 5.9 percent this year and five percent in 2011.

Another British Banking giant, Hongkong and Shanghai Banking Corp. (HSBC), is likewise bullish on the Philippines’ growth but sees a slightly cautious five percent expansion in 2010 and between 4.5 percent-five percent in 2011.

The country’s GDP in the first semester rose by a surprising 7.9 percent, the highest in the three decades.

The National Government, however, is sticking to its growth targets of five to six percent this year, and seven to eight percent in 2011.

Meanwhile , FMIC said inflation will likely hover below four percent in the second semester of 2010, as the slowdown in the US economy and other advanced countries is easing pressure on commodity prices.

“Barring any catastrophic calamities like last year, neither will there be inflationary threats in the domestic front,” it said.

Likewise, the announcement of the Bangko Sentral ng Pilipinas (BSP) to hold policy rates at four percent until the end of the year and the National Government’s decision to stick to the P325- billion deficit target, prompted FMIC to lower its inflation forecast. It said the country’s financial system remains awash with funds despite some P240 billion siphoned off by the BSP since the end of 2009. Special deposit Accounts (SDAs) worth over P900 billion have been funnelled into the BSP’s vaults.

“The peso will tend to be stable up to October.

Unless offset by portfolio flows and overseas Filipino workers (OFWs) remittances in the last quarter, the peso may have a slight upward tendency in last quarter of the year given the strong recovery of the economy,” the FMIC report added. –Ted P. Torres (The Philippine Star)