An economic report from First Metro Investments Corp. (FMIC) and University of Asia and the Pacific (UA&P) has stated that despite slower gross domestic product (GDP) growths and increased inflation rates, the Philippine economy will continue to remain strong and robust throughout 2014.
Roberto Juanchito Dispo, FMIC president, said in The Market Call that the outlook for the Philippine economy, or GDP growth, will remain positive as domestic demand “remains intact,” external demand will pick up, and government will increase spending for areas hit by Super Typhoon Yolanda.
FMIC and UA&P publishes The Market Call.
Dispo said that amid the destruction caused by Yolanda, macroeconomic data for October and November suggests strong macro levels and robust growth for the fourth quarter of 2013, especially the double-digit surge of industrial production.
The National Economic Development Authority announced on Thursday that the country’s GDP grew by 6.5 percent during the fourth quarter of last year, and 7.2 percent for the whole of 2013.
“[Strong external and domestic demand as well as Yolanda reconstruction], together with strong consumer and investment spending, lead us to conclude that domestic economy will retain its vitality. And with the advanced economies, led by the US, projected to grow faster than in 2013, exports should provide further impetus for another over 7 percent GDP growth [for 2014],” Dispo said.
“The havoc inflicted by Super Typhoon Yolanda notwithstanding, the economy remains strong in fourth quarter and growth should accelerate back to a rapid pace in 2014,” he added.
“The main drawback has been the acceleration of inflation, but being driven by supply chain disruptions caused by the super typhoon, it is likely to be a concern for some three months.
Besides, the recent readings are still in the middle range of the Bangko Sentral ng Pilipinas’ [BSP] target of 3-percent to 5-percent,” the FMIC president added.
Furthermore, Dispo said that inflation rates within the first quarter of the year is expected to go up to 4 percent—4.1 percent in January and March, and 3.9 percent in February.
“This is a spike buttressed by the fact that food prices have been easing and crude oil prices have recently slumped by more than 5 percent since it peaked in early December. Nonetheless, we expect first quarter 2014 inflation to hit 4 percent, but slow down slightly for the rest of the year,” Dispo said.