ADB may raise 2012 forecast

THE PHILIPPINES’ 2012 growth forecast could be raised by the Asian Development Bank (ADB), with its country chief noting improved investor sentiment, recent ratings developments and fiscal gains.

Noting the first quarter’s stronger-than-expected 6.4% gross domestic product (GDP) growth, ADB Country Director Neeraj Jain yesterday said “Our forecast at that time was still 4.8%, but that forecast will likely be exceeded.”

“For the precise number we are still reviewing, and it will be released in September,” Mr. Jain told BusinessWorld, adding: “It is worth noting, however, that there is an upside momentum for the Philippines.”

The ADB’s current 2012 forecast is higher than the 3.7% result for 2011 but falls below the government’s 5-6% growth target.
Mr. Jain said investor optimism following recent evaluations by credit rating agencies would support the growth momentum.
“Perceptions of investors have improved. They are bullish in the Philippines, following improvements of the sovereign credit rating,” he said.

Fitch Ratings last month affirmed the country’s “BB+” rating, one level shy of investment grade, along with its “stable” outlook.

A month earlier, Moody’s Investors Service upgraded its Philippine outlook to “positive” from “stable”, a move seen paving the way for a possible upgrade from its current Ba2 rating — two notches below investment grade — in the next six to 18 months.

“Recent ratings can result in more investments entering the Philippines as they become more confident on its macroeconomic fundamentals,” Mr. Jain said.

He also noted that the country’s “fiscal situation and inflation are very well managed, providing a springboard for growth.”

The deficit stood at P22.786 billion as of May, well below the P109.341-billion cap for the first semester, latest data show. The five-month revenue haul was P645.645 billion, an 11% jump from the P581.501 billion collected in the same period a year earlier.

Inflation, meanwhile, averaged 3.0% as of May. The figure is slightly lower than the central bank’s full-year forecast of 3.1%. June data is scheduled to be released this Thursday and analysts expect a further easing.

In Malacañang, Secretary Ramon A. Carandang of the Presidential Communications Development and Strategic Planning Office said the government was optimistic about the second quarter.

“I think there’s an expectation now that second quarter growth will be approximately [be around 6.4%],” he said in briefing, adding: “The same factors that led to the growth in the first quarter seem to be present and perhaps even more in the second quarter, which is where we’re seeing some confidence that… growth could be very strong.”

He stressed, however, that the government was keeping its 5-6% full-year target given uncertainties in the global economic environment.

Mr. Jain also warned of offshore developments that could pose risks.

“The Philippines is a highly globalized economy and whatever happens outside the Philippines has an effect,” he said. –ANTONIO SIEGFRID O. ALEGADO, Reporter with a report from Noemi M. Gonzales, Businessworld