Forecasts 6% for 2016 vs 5.7% for 2015
the Philippine economy will get a boost from campaign-related spending ahead of the May 2016 elections, and as driven mainly by its strong domestic industries, will post growth of a brisk 6 percent in gross domestic product (GDP) despite weak external factors, British investment bank Standard Chartered (StanChart) said.
StanChart sees GDP gaining more pace next year from a 2015 growth forecast of 5.7 percent.
“The robust domestic sector, along with some support from the upcoming election, should paint a resilient growth picture for the Philippines even as the external picture remains weak,” StanChart said in its latest research note.
“Investment growth is likely to remain a key swing factor, and confidence in the continuing growth story will be important. We do not expect the election to significantly affect the Philippine peso,” it added.
The London-based multinational banking and financial services company issued its latest note after Fitch Ratings unit BMI Research said over the weekend that the Philippine elections in May could create uncertainty about leadership that could threaten to set back the political and economic gains the country has achieved over the last five years.
StanChart said, however, the May 2016 elections will benefit mostly the manufacturing, government and private services, transport, communications and storage sectors.
The impact on these sectors may have a spillover effect on the general economy. That may “indicate more demand from the primary industries, utilities and trade sectors, due to high forward linkages” as observed from the trends during the 2004 general election.
The government has not lowered its growth target of 7 percent to 8 percent for the country’s GDP for this year and 2016 despite the sharp slowdown in the first quarter. In the first half of the year, the economy grew 5.3 percent.
StanChart notes that among the three presidential candidates so far, Grace Poe leads, based on the latest Social Weather Stations (SWS) and Pulse Asia polls, while Mar Roxas enjoys a “popularity boost” from the endorsement of President Benigno S. Aquino 3rd and Vice President Jejomar Binay remains among the top three.
This trend may change, it added, as more candidates confirm their campaigns by December. It mentioned other popular candidates such as Davao City Mayor Rodrigo Duterte, Senator Ferdinand ‘Bong Bong’ Marcos and Manila Mayor Joseph Estrada, but it gave no further comment.