CLARK FIELD, Pampanga—Owing to the fragile US economy, publicly listed BDO Unibank Inc. (BDO) estimates that the country’s gross domestic product (GDP) may not exceed 5 percent this year.
In a presentation at the Economic Journalists Association of the Philippines (EJAP)-San Migel Corp. (SMC) 2012 Business Journalism Seminar, BDO Treasury Group-Market Research First Vice President Jonatahan Ravelas said GDP this year may be between 4.25 percent and 4.75 percent.
GDP is the total value of goods and services produced in a country in a year.
Ravelas said this forecast is similar to the growth of the Philippine economy in 2011 since the US economy will remain fragile and the crisis in Europe may still take a turn for the worst this year. But he added that with steady inflation, the Philippines would still enjoy a relatively higher domestic spending that can boost economic growth.
“I think it’s like 2011, all the problems are still here. [In Europe], I think the question is, who’s next? Portugal? Italy? Ireland? Spain? Make a guess…US recovery, we’re not sure, remember that the [US] recovery stems from the fourth quarter. It’s all about SC, the Santa Claus crowd. It’s all about spending during Christmas. So we don’t know [if the US economy’s] first quarter numbers will remain supportive,” Ravelas said over the weekend.
He added that while there was a significant improvement particularly in the jobs data released by the US government in the last quarter of the year, uncertainties persist and these will likely affect the Philippine economy.
But Ravelas said what will help the economy is benign inflation and the government’s increase in its expenditure this year. He added that it is a good sign that the government is increasing spending and that having a deficit this year is encouraged.
The only thing that the government needs to work on is increasing revenues. Ravelas said that if only the government can keep revenue increase stable at 10 percent and above, this would already be a big boost to the economy.
“So the good thing about our country is that it signals spending. Whether this is infrastructure spending, it still signals spending. I think in the second half, we will see the rewards of these things,” he added.
Ravelas said the forecast is the “better” and more likely scenario that was simulated by the bank. Two other scenarios estimate the country’s GDP to be around 3.5 percent to 4 percent under the good scenario and 5 percent to 5.5 percent under the best scenario.
He added that under the good scenario, economic growth will be similar to 2008. This means that the country could experience some spillover effects from a fallout of global risks such as the euro-zone crisis and a drastic delay in the government’s public-private partnership (PPP) projects.
Under the best scenario, Ravelas said the bank assumes that the PPP projects will be rolled out in a timely manner and that the country will be able to attract some more foreign direct investments (FDI) this year.
The National Statistical Coordination Board (NSCB) recently said that the country’s consolidated FDI pledges hit a 15-year high in 2011 with the pledges reaching P256.1 billion.
Total FDI in 2011 exceeded the P241.1 billion recorded in 1996. The NSCB said the pledges last year were also the highest total FDI recorded since it started compiling FDI data in 1996, the results of which were released in 1997.
“If you look at the numbers in terms of growth rate, these are practically very good numbers already, but we eventually have to try to hit double-digit revenue growth, and eventually expenditure that will continue to rise. I don’t think budget deficit will be a problem this year, in fact it will be more [encouraging] to have a higher deficit,” Ravelas said.
In 2011 BDO posted an audited net income of P10.5 billion, a 19-percent growth over the P8.8-billion net profit posted in 2010. Despite the country’s 3.7-percent GDP growth, BDO expanded its loan portfolio by 24 percent to P670.1 billion in 2011.
BDO is a full-service universal bank that provides a complete array of industry-leading products and services to the retail and corporate markets, including lending, deposit-taking, foreign exchange, brokering, trust and investments, credit cards, corporate cash management and remittances. Through its subsidiaries, the bank offers leasing and financing, investment banking, private banking, bancassurance, insurance brokerage and stock-brokerage services. –Cai U. Ordinario / Reporter, Businessmirror
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