PHL, Malaysia to lead ASEAN growth till 2015, says Barclays

The Philippines and Malaysia are expected to lead growth in Southeast Asia until 2015, thanks to reforms and projected roll-out of major infrastructure projects, British financial services giant Barclays Plc. said over the weekend.

“Within ASEAN, we expect the Philippines and Malaysia to lead growth rates,” Singapore-based Barclays regional economist Rahul Bajoria noted in the latest “Global Economics Weekly.”

Bajoria said the Philippines and Malaysia will see “strong growth” as “on going reforms and large infrastructure projects provide a solid foundation for economic activity.”

The Aquino administration’s anti-corruption drive helped improve the debt dynamics, and tax collections reforms earned the Philippines three consecutive investment grade ratings from Fitch Ratings, Standard & Poor’s and Moody’s Investors Service this year.

It also aims to bolster transport networks, schools, health facilities by hiking public spending on infrastructure to 5 percent of gross domestic product (GDP) from the current 2.5 percent and attract private sector investors through its public-private partnership (PPP) program.

“I guess they (Barclays) continue to be hopeful that bidding will be translated to actual project implementation, translating to tangible infrastructure,” Bank of the Philippine Islands (BPI) lead economist Emilio Neri Jr. said in a telephone interview Monday.

The Philippines has been leading growth in Southeast Asia “for sometime now, and will continue to do so,” said Neri.

The economist cited other “key factors” sustaining growth until 2015, including an accommodative monetary policy and robust consumption.

Bangko Sentral ng Pilipinas kept the key policy rate at a record low of 3.5 percent since late last year, allowing brisk lending activity.

Barclays sees policy rates at record lows until the first half of next year, with a 25 basis-point hike likely to happen in the third quarter.

The Philippines’ third quarter growth of 7.0 percent, the fastest in Southeast Asia, affirms that the country’s growth “remains steady,” said Bajoria.

But the lingering impact of super typhoon Yolanda, which flattened coastal towns and cities in Central Philippines last Nov. 8, will subdue growth this quarter before any favorable effect of reconstruction is felt in early 2014.

Barclays sees Philippine GDP hitting 6.8 this year, and 6.5 percent for both 2014 and 2015 trailing China’s above 7 percent in emerging Asia.

The bank sees Malaysia growing at 4.8 percent in 2013, 5.4 percent in 2014, and 5.3 percent in 2015.

“We expect some growth normalization, as a further recovery in the region’s largest economy drives activity in sync with the global economy,” said Barclays’s Bajoria, forecasting emerging Asia growth of 6.1 percent this year and the next and 6.4 percent in 2015. – Siegfrid Alegado/VS, GMA News