Fitch-owned think tank revises forecast up from 15%
Lending in the Philippines will continue to post a double-digit increase this year on the back of sustained growth in the economy, given the expanded roles of China and Japan in the country’s trade and investment, BMI Research said.
In a report released Tuesday, the Fitch Group-owned research firm forecast loan growth to hit 17 percent in 2017, an upward revision from its previous projection of 15 percent, although a moderated pace compared with its 18 percent estimate for 2016.
The latest data from the Bangko Sentral ng Pilipinas (BSP) showed bank lending in November 2016 rose 18.6 percent from 17.7 percent in October. Including the reverse repurchase placements with the BSP, lending grew by 17.4 percent in the comparable year-earlier period.
“Strong economic growth momentum in the Philippines is closely linked with banking assets and loan expansion as there is a positive feedback loop at play,” the think tank said.
With an impressive 7.1 percent third-quarter economic growth, the Philippines was placed as one of the fastest growing economies in Asia, it said.
“We expect this outperformance to be sustained as an improved business environment, positive demographics, and prudent macroeconomic policies that encourage savings will continue to drive investment and output growth,” it added.
Moreover, the Fitch-owned firm said the government’s pragmatic and friendly posture toward China and Japan will help boost trade and investment relations with the two economic powerhouses in the region.
“This will help to power strong credit uptake as both household and businesses in particular assume leverage against a backdrop of profitable opportunities,” the report said.
Earlier, BMI said Philippine infrastructure would continue to benefit as China, Japan and other developed countries compete for economic and political influence on the country through pledges of development assistance and investment.
The Department of Finance (DoF) had also said the commitments of investment and development assistance pledges by Japan and China to the Philippines are among the largest amounts announced by the two economic powerhouses for a single country,
The DoF said the unprecedented pledges of aid and investments by Japan of $9 billion and China of $24 billion reflect the strong confidence of the international community in the Duterte administration’s capability to sustain the Philippines’ high growth path and realize its inclusive growth agenda.