Forecasts 6.0-6.5% GDP growth in 2015, PSEi to breach 8,000 pts
Life insurance firm Philam Life Philippines said the first-quarter 2015 slowdown in the localeconomy does not indicate trouble—other than slow government spending—that cannot be remedied during the rest of the year.
Philam expects gross domestic product (GDP) this entire year to grow between 6 percent and 6.5 percent, stepping up during the rest of the year after slackening to 5.2 percent in the first three months, as the company sees bright prospects in tourism, remittances and outsourcing, and potential for more infrastructure spending ahead of the 2016 elections.
Its 2015 forecast stands below the government’s target of 7-percent to 8-percent GDP growth this year.
“Six percent is a healthy number. I don’t think there should be any disappointment. Maybe even 6.5 percent,” Philam Life’s head of equity fund management, Eduardo Banaag Jr., said, referring to the company’s GDP forecast.
Philam Life Asset Management Inc. (PAMI) President Ferdinand Berba, meanwhile, cited factors that can lift up the economy further: high potential and improvement in tourism and infrastructure, sustained outstanding performance by the remittance and business process outsourcing sectors, and government plans to ramp up its spending.
“For the Philippines, it’s just the beginning. We still have a lot more to do. The slowdown in the first-quarter GDP is not because there’s something wrong with the economy. It’s just that the government is not spending much. So it’s relatively under control. If they (government) spend more in the second quarter, I think the statistics would show,” Berba said.
“It’s not as if there’s something wrong with our earning capacity. Our earning capacity is there, dollars are coming in—that will continue to rise . . . Remittances and BPOs will continue to grow. If the government does well and if the tourism campaign does better and we’re able to build more infrastructure for the tourists to come here, I think that’s a big opportunity for us to grow our tourists base, which is still very small,” he added.
Berba urged the government to open up the local economy more to foreign investors and secure policies that will allow easier access to it by investors from around the globe.
“If we’re able to do something about making it easier for foreign companies to invest in the Philippines, then your foreign direct investment will grow. The 60-40 rule (referring to the foreign ownership limit)—if the government is able to fix such things, then you’ll have more foreign companies building more factories that can spawn more jobs for Filipinos. That’s an area that’s not been fully developed,” the PAMI president said.
Despite slower GDP growth in the first quarter, Berba said he is still optimistic that the economy will continue to expand in the coming years with all such factors unleashing the potential in the growth sectors mentioned above, moving forward.
Shares on the Philippine Stock Exchange are also expected to drive the benchmark PSE index past the 8,000-point mark by yearend despite being buffeted now by the headwinds from the volatile global markets.