Investment banking firm Goldman Sachs retained its growth forecast for the Philippines this year at 5.5 percent, noting that its overall economic outlook for the country remains positive.
The firm’s projection was also lower than the country’s overall growth of 6 percent in 2012 and the government’s 6-percent to 7-percent target for 2013.
In a media roundtable on Thursday, Mark Tan, Goldman Sachs executive director and economist, said that the firm’s projection is a bit lower than the market consensus of 6 percent.
“Coming from a fast paced growth in the fourth quarter of 2012, we will see a deceleration in the momentum of growth this year,” he said.
Tan noted that the deceleration can be attributed to the slow performance of some key economic indicators in the first quarter of the year.
However, Tan mentioned that the projected growth for the country is still “pretty decent and above the trend growth.”
The economist added that the growth drivers of the economy are still domestic demand, consumption, strong investments and stabilizing exports.
Inflation, on the other hand, is expected to rise from 3.2 percent in 2012 to 4.2 percent this year, the firm said.
“With strong domestic growth, we expect a pick up in inflation rate, but it is still quite manageable,” Tan further said.
Furthermore, Goldman Sachs also sees a continued appreciation of the Philippine peso, which they projected to stand at P37.50 per US dollar. Tan explained that this could be attributed to the prospect of strong inflows and robust domestic growth.
Meanwhile, Christopher Eoyang, Goldman Sachs’ chief growth markets strategist, said that the change in administration and the economic momentum of the Philippines has drawn attention of international investors.
He added that the country has become one of the best performing emerging markets globally.
The firm’s strategist also said that the condition of the human capital in the country is still good, especially in the services sector.
Lastly, the firm said that to ensure the momentum of the Philippine economy, the government must continue its programs and policies on infrastructure development, education, technology and removal of red tape and corruption.