Economists raise PHL growth forecast anew

Economists believe that the country’s gross domestic product may continue to accelerate at a surprising growth as inflation remains slow.

In its quarterly report, “Philippines: Back to Normal,” New York-based think tank Global Source Partners projected that the country’s GDP may rise to 6.8 percent from its previous forecast of 6 percent.

Global Source kept next year’s economic forecast at 4.7 percent, according to the report.

“Economic momentum seems unlikely to wane significantly this year, with growth apt to settle between 6.5 to 7 percent, based on our estimates,” former Finance Undersecretary Romeo Bernardo and economist Margarita Gonzales said in the report.

The Cabinet-level Development Budget Coordination Committee had upgraded the country’s GDP growth forecast to 5 to 6 percent instead of 2.6 to 3.6 percent for this year.

The Philippine GDP grew 7.9 percent in the first six months of the year.

“First-half growth came in at a rather high 7.9 percent and while leading indicators signaled a deceleration in the succeeding quarter. This will probably not be abrupt,” Bernardo and Gonzales said.

Global Source cited the revised GDP growth forecast of the International Monetary Fund (6 to 7 percent) and World Bank’s (4.4 to 6.2 percent) on the back of the strong personal consumption and robust export earnings.

However, Global Source said the country’s strong GDP growth could not be sustained until next year as exports would eventually lose its pace.

“While phenomenally strong growth seems to be a foregone conclusion this year, we still do not see the pace continuing in 2011, leaving our forecast unchanged at 4.7 percent,” the think tank said.

Global Source pointed out that the strong peso could bring down the remittance growth and serve to restrain private spending, while gains from election-related and typhoon reconstruction spending would be gone next year.

On the other hand, Metrobank Group’s First Metro Investments Corp. (FMIC) and University of Asia & the Pacific (UA&P) said that the country’s 2010 GDP growth could top 7 percent.

In the latest edition of “Market Call,” FMIC and UA&P said that the economy would slow down this second half after expanding by 7.9 percent in the first half.

But the Philippine GDP would not fall below 6 percent in the second half, the study noted.

Meanwhile, Global Source lowered its inflation forecast to 3.8 from 4 percent this year due to stable oil and commodity prices.

The Bangko Sentral ng Pilipinas (BSP)lowered its inflation forecast to 3.5 percent from 4 percent this year and to 3 percent from 3.25 percent next year in light of the slower-than-expected 3.5 percent in September.

The BSP has set an inflation target of 3.5 to 5.5 percent this year and 3 to 5 percent between 2011 and 2014. — JE/VS, GMANews.TV