BMI Research sees avg PH GDP growth at 5.9% in next 5 yrs
The Philippine economy may not hit the government’s speedy growth target for this year, but even with a slower-than-forecast 5.9 percent average in the next five years the country could still outperform most of its Southeast Asian peers on the back of ongoing reforms, the think tank of ratings agency Fitch said.
BMI Research’s 5-year average forecast stands below the Philippine government’s unrevised 7 percent to 8 percent growth target for 2015 and 2016.
While most analysts have revised downward their full-year growth estimates for this year following the lower-than-expected 5.3 percent expansion in gross domestic product (GDP) in the first half, BMI Research has chosen to keep its 6 percent forecast for 2015.
Hopes on reform
The think tank of the global ratings agency said political and economic reforms in the Phil ippines are gaining traction, which should help accelerate investment growth over the medium term.
“Owing to the fiscal and monetary prudence in the Philippines, we expect the national savings rate to increase over the coming years, which will, in turn, fuel rapid investment expansion,” BMI Research said in a report.
It lauds the central bank’s proactive approach toward managing inflation, which it said has allowed the country to enjoy relative monetary stability over the past few years.
“Inflation has been contained within or below the central bank’s target range for six consecutive years, and we expect this achievement to be sustained over the coming decade,” it added.
In August, headline inflation in the country eased further to an all-time low of 0.6 percent, bringing the year-to-date average favorably below the central bank’s target rate of 2 percent to 4 percent at 1.7 percent.
BMI noted that fiscal reform measures have also allowed the government to boost its top line and trim its expenditure, thereby narrowing the country’s fiscal deficit.
This year so far until July, the government has narrowed its budget deficit to P18 billion from the year-ago level. For July alone, however, the budget gap showed a swelling to P32.2 billion from the P1.8 billion gap posted in July 2014.
BMI cited economic reforms that are spearheaded by the government, such as the level of foreign direct investment in 2014, which surged 65.9 percent year-on-year to an all-time high of $6.2 billion,
The think tank also noted efforts by the current administration to improve transparency and accountability by its agencies.
“Going forward, we remain optimistic that ongoing political and economic reforms will continue to fuel foreign investor interest and drive investment growth,” it said.
“While external headwinds will continue to pressure Philippine exports over the course of the sec ond half of the 2015, we expect an acceleration in government disbursements for infrastructure projects to act as a significant tailwind to economic activity through the end of the year,” the BMI analysts’ report added.
The past Friday, the government reported that its spending on infrastructure nearly doubled in July from a year earlier but fell short of the target for the month. Data from the Department of Finance showed that infrastructure expenditure and other capital outlay by the government surged 92.9 percent to P38.3 billion, but stood 16.55 percent below the P45.9 billion goal set for the month.