The Philippine economy, as measured by gross domestic product (GDP), may grow faster at 6.9 percent in 2013 as investments to infrastructure are scaling up, according to the Standard Chartered Bank.
In its latest research report released on Monday, the bank said that it lifted its 2013 growth projection for the country from its earlier forecast of 5.8 percent.
The said projection is within the 6-percent to 7-percent growth target of the government. However, it was lower than the 2013 first-quarter GDP expansion of 7.8 percent.
For the next two years, it also revised its growth forecasts to 6.3 percent and 7 percent, respectively.
“We expect the Philippines to maintain strong economic growth and manageable inflation over the medium term,” Standard Chartered stated.
Supported by domestic consumption and investments, the bank added that the economy is moving toward balanced growth.
“We now expect investment growth to make a bigger contribution to growth in 2013,” it said.
Standard Chartered also noted that investment has grown at double digits for three consecutive quarters, easing slightly to 16.8 percent year-on-year in the first quarter of 2013 from 19.7 percent in the fourth quarter of 2012.
“The wave of investment growth has been driven by the domestic market amid cautious sentiment globally,” the bank added.
Furthermore, Standard Chartered said that GDP growth is seen to be boosted by public-private partnership (PPP) and non-PPP investment growth.
“The Philippines has yet to experience a spike in PPP-driven construction. Three projects—two road construction projects and one school infrastructure project—are in the construction stage,” the bank added.
However, it noted that at least 20 projects are still in the planning and bidding phases.
Standard Chartered also expects that the remaining seven of the eight projects that were rolled out last year could move to the finalization and construction phases around end-2013 or mid-2014.
“The government expects these projects, which include the construction of medical, power, education and transport infrastructure, to complement the current construction boom in the Philippines and provide the backdrop for private investment,” the bank said.
Also, it mentioned energy-generating hydroelectric power projects, seen to be critical, as the Philippines still suffers from power shortages in certain areas.
Construction of facilities such as airport terminals, on the other hand, will increase tourist flows that will make tourism a key revenue-generating sector, Standard Chartered added.
However, the bank expressed concern on whether the pace of progress in PPPs can keep up with private-sector investment, to ensure that basic infrastructure such as power, water and transport can cope with increased demand.
“Overall, we expect the Philippines to register above-trend growth in the next three years, and believe this period presents a golden opportunity for the country to leverage its investment potential and accelerate its growth trajectory,” it said.