THE Philippine economy, as measured by gross domestic product (GDP) growth, is seen to moderate in 2014 and the years ahead.
Projections said that the country’s GDP may grow above six percent next year, or within the government’s 6.5-percent to 7.5-percent target. Ratings agency Standard & Poor’s projected the Philippine GDP to hit 6 percent to 6.5 percent in 2014 and 2015, respectively.
It also sees the country as the new leader in terms of growth among the major economies in the Association of Southeast Asian Nations (Asean).
“The Philippines, which Standard & Poor’s recently upgraded to investment grade, has taken over the Asean growth leadership role from Indonesia,” it stated.
Meanwhile, Standard Chartered Bank expects the country to maintain strong economic growth at 6.3 percent and 7 percent in the next two years.
“In our core scenario, the economy is moving towards balanced growth, supported by domestic consumption and investment,” it stated.
The bank said that the public-private partnership (PPP) program of the government is seen to impact the GDP growth significantly in the next three years.
Other fundamentals such as firm household consumption and remittance inflows, the recent upgrade to investment grade, and a gradually improving global economy will support economic growth in the medium term, it added.
“Overall, we expect the Philippines to register above-trend growth in the next three years, and believe this period presents a golden opportunity for the country to leverage its investment potential and accelerate its growth trajectory,” the bank further said.
According to Marios Maratheftis, Standard Chartered Bank global head for the Macro Research, with its strong fundamentals, the Philippine economy may grow beyond China in the coming years.
“We still are very positive for the Philippines. It’s a positive story. Within the next three, four years there is no reason why the Philippines cannot start growing significantly faster than China for example,” he said.
Maratheftis added that there is no reason why from 2015 onward the Philippines cannot be growing at 8 percent and above.
He cited leveraging in the Philippines as one of the factors of the positive outlook, as the levels of debt are very low.
Maratheftis added that the country’s gross domestic product is growing much faster than credit, which he said is a healthy sign. “It also shows that for the Philippines businesses and households. . . they can create much more economic activities than other countries can,” he said.
On the other hand, Japan-based Rating and Investment Information Inc. (R&I Ratings) also projected the Philippine economy to remain robust in next year.
R&I said that public investment has started to increase as PPP, in which public facilities are constructed using private capital, are expected to gain momentum.
“Whether such trend will be translated into a steady rise in investment ratio, and in turn, investment will serve as a growth driver, along with consumption, will be the key to future economic growth,” it stated.
For its part, the International Monetary Fund (IMF) had revised its 2014 outlook for the country to 6 percent from 5.5 percent.
IMF Resident Representative for the Philippines Shanaka Jayanath Peiris said that among the countries in Asean, only the growth outlook for Philippines has been lifted.
“The region has been softer than expected. Most countries were reduced but the Philippines is the only outlier. It is the only one we are raising forecast significantly,” he added.
Peiris said that the outlook was based on the strong macroeconomic fundamentals of the country, such as robust consumption and remittances.
“The key things that come to mind, is that the Philippines is enjoying this demographic dividend. It has a labor force that is youthful, English speaking. Asean coming in by 2015. . . macrofundamentals has been strong given the hard work in the past,” he added.
Furthermore, Washington-based World Bank in its Global Economic Prospects report, said that the country’s GDP may rise to 6.4 percent in the next two years.
In the report, the lender said that the Philippines’ industrial activity, which relied less on domestic stimulus measures, continues to expand by a double-digit rate in early 2013.
It attributed the double-digit rate on the country’s strong trade linkages to a rebounding Japan. “Suppliers of parts and components to Japan in regional production networks, particularly Thailand and the Philippines, could benefit from gains by Japanese exporters in global markets and even derive additional benefits through increased potential FDI [foreign direct investments]from Japan,” the World Bank said.