The expansion of the Philippine economy is seen to continue in the third quarter of the year despite market volatilities.
In a recent report, Standard Chartered Bank (SBC) said that its outlook for the country’s growth remains positive.
“While Philippine markets are likely to remain volatile in the short term on US Fed tapering concerns, we expect this volatility to have a limited impact on long-term economic trends,” SBC economist Jeff Ng stated.
Ng is referring to the expected tapering of the $85 billion a month stimulus program of the United States Federal Reserve known as quantitative easing (QE).
He added that the economic growth in the country has been resilient over the past decade, even during periods of market volatility, adding the “Philippines has several strengths relative to its Asian peers.”
Growing 7.5 percent in the second quarter of 2013, the Philippines remains the fastest growing economy among emerging economies in the Association of Southeast Asian Nations. It also surpassed the growth rates of its Asian neighbors.
The economist noted that the country has solid domestic consumption and investment that would “likely to support growth in the next three years.”
Data from the National Statistical Coordination Board said that for the second quarter of 2013, household spending continued to expand by 5.2 percent, while Government Final Consumption Expenditure (GFCE) substantially grew by 17.0 percent.
Investments in Fixed Capital Formation in the second quarter of 2013 increased to 9.7 percent from 8.7 percent of the same period last year.
Furthermore, Ng said that the economy ranks favorably based on Moody’s External Vulnerability Indicator, indicating its resilience to external shocks.
He said “strong remittance inflows from overseas workers more than make up for the trade deficit in the current account.”
Overseas Filipino workers remittances remained robust at the first half of the year as it soared by 6.2 percent to $11.8 billion.
“The 2012 current account surplus of 2.8 percent of GDP [gross domestic product]would have been a deficit of 4.3 percent if overseas workers’ remittances were excluded,” Ng said.
The economist also said that the SBC is maintaining its 6.9-percent projection for the Philippines for full year 2013. MAYVELIN U. CARABALLO