An investment banking firm is expecting that the Philippine economy will maintain the robust growth it recorded at the start of the year.
“The Philippine economy’s stellar performance of 7.8-percent expansion in GDP [gross domestic product]in the first quarter is a sign that we are on the right track. Almost all sectors excepts exports posted positive growth,” First Metro Investment Corp. (FMIC) President Roberto Juanchito Dispo said in a press briefing.
FMIC is also optimistic on the country’s economy despite risks coming from the slowing down of equities market, peso depreciation, special deposit accounts rate cuts and the uncertainties in the external markets.
With such optimism, the firm is seeing Philippine economic growth to be well within the government target of 6 percent to 7 percent this year.
It projected that the country’s GDP would grow at 7 percent to 7.5 percent in 2013, on account of strong manufacturing and consumer sectors.
FMIC also said that heavy consumer spending as well as the governments’ investment to infrastructure, such as the public-private partnership (PPP) projects, will also drive the expansion of the economy.
Meanwhile, it added that inflation will remain at the low end of the 3-percent to 5-percent target of the government. The firm projected that inflation is anticipated to further slowdown to an average of 2.8 percent by the end of the year in the midst of sufficient food supply and stable oil prices.
Furthermore, remittances from overseas Filipino workers (OFW) is also seen to remain resilient at 4 percent to 5 percent for the year.
As of April, OFW remittances rose 7 percent year-on-year to reach $2 billion, while cumulative remittances for the first four months of the year was recorded at $7.7 billion.
“Demand for Filipino workers will be sustained, which will continue to stimulate and intensify domestic consumption,” FMIC said.
On the other hand, University of Asia and the Paicific economist Dr. Victor Abola said that despite the positive outlook on the economy, there are still internal threats that could hamper growth. He said that among the threats were peso appreciation, lower job creation, lower tax collection and power shortage especially in Mindanao.
No asset bubble
But Abola said that there is no anticipated asset bubble this year, because people are slowly becoming less aggressive in the market.
Justino Ocampo, FMIC senior vice president, on the other hand, said that in terms of sectors, consumer and retailing segments remain the growth sectors, citing that retail industry hit P1.42 trillion in 2012.
Ocampo added that infrastructure is also starting to improve, with the government exerting more effort to boost the sector.
“The government pumped investments in this sector [infrastructure], particularly in road, hospitals, irrigation system and we expect that to continue for the rest of the year,” he said.
For the equity market, Ocampo said that the fundamentals remain the same.
“Equity market is still healthy. We still have transactions in this market, timing is the only key,” he said.
Bede Lovell Gomez, deputy group head of FMIC Investment Advisory, said that the outlook for the equities market remains bullish, despite a bloodbath in the last two weeks. The Philippine Stock Exchange index, according to Gomez, will still hit 7,200 points at the end of the year with earnings growth of 20 percent and price-earnings ratio projected at 18.7 times.
Overall, FMIC reported that there will be further growth opportunities in manufacturing and infrastructure, particularly in power and energy, PPP program. There will also be growth opportunities in tourism, especially gaming.