Banking giant HSBC has slightly raised its 2016 Philippine growth forecast, citing election-related private consumption and sustained government spending as factors.
HSBC economist Joseph Incalcantera, in a research note, said real gross domestic product (GDP) growth was likely to hit 5.8 percent this year. The previous forecast was 5.7 percent.
The new projection, however, is lower than the government’s downwardly-revised 6.8 percent to 7.8 percent target—from 7 percent to 8 percent—for the year.
GDP growth eased to 5.8 percent last year from 6.1 percent in 2014 on the back of an exports slowdown, among other factors.
“Growth accelerated to 6.3 percent in the fourth quarter, bringing full year 2015 growth to 5.8 percent; we upgrade our 2016 GDP forecast to 5.8 percent from 5.7 percent,” Incalcantera said.
HSBC expects a pick-up in both private consumption and government spending following the February 9 kick-off of the election campaign period.
It also said the strong momentum in government spending was expected to continue in the first half of 2016.
HSBC also dismissed concerns that remittances could be adversely affected by low oil prices and a slowdown in growth in the Middle East, which hosts many migrant Filipinos.
“While we forecast a moderation in remittances growth from the Gulf Region, growth is expected to remain steady elsewhere, which should offset the moderation,” Incalcantera said.
He also pointed out that the decline in remittances from the United States due to regulatory reasons would still see money flowing into the Philippines via other channels.
The Bangko Sentral ng Pilipinas has yet to release full-year 2015 remittance data. As of end-November, the amount of cash transfers through banks totaled $22.84 billion, up 3.6 percent from a year earlier.