Standard Chartered Bank (SCB) has maintained its 2013 growth forecast for the Philippines at 7.2 percent, the bank said in a research report released on Thursday.
“We maintain our forecast of 7.2-percent GDP [gross domestic product]growth in 2013 and 6.7 percent in 2014, and expect fourth-quarter GDP growth to remain resilient at 6.4 percent year-on-year,” the bank stated in the report titled “Philippines–A fifth quarter of 7 percent-and-above growth.”
SCB said that Super Typhoon Yolanda is unlikely to derail long-term growth of the Philippines, noting that its fourth-quarter GDP forecast is higher compared to the 4.1-percent and 5.9-percent forecast range of the government.
“We are not concerned about a smaller headline number in fourth quarter, as the fourth-quarter result will also be suppressed by a high base effect [7.1-percent year-on-year growth in fourth-quarter 2012],” it stated.
The bank also noted that leading indicators have remained positive, as the Composite Leading Economic Indicators Index rose to 0.2 percent in the fourth quarter from zero percent in the third quarter, while the business outlook for the fourth quarter rose to 52.3 percent from 42.8 percent.
Furthermore, SBC said that downside risks to GDP growth appears limited, given that Metro Manila and other regions were relatively less affected by the typhoon.
In comparison, the bank noted that the Eastern Visayas area, the most severely affected area, only contributed 2.2 percent of total GDP in 2013.
“We are more concerned about the implementation of reconstruction projects, as improved infrastructure will benefit economic growth in the longer term,” it stated.
Next year, the bank said that government effort and increased overseas remittance inflows will support reconstruction and household spending in the coming quarters.
“We expect reconstruction projects to boost domestic growth [already high on increased household expenditure and investment]in 2014,” it said.