Most indicators support PHL economic growth, says FMIC
The economy will grow by 5 percent to 6 percent this year on government spending, consumer demand and overseas Filipino workers’ (OFW) remittances, First Metro Investment Corp. (FMIC) said in a briefing Tuesday on Philippine economic outlook.
FMIC, a unit of Metrobank Group, is “cautiously optimistic” about the Philippine economy, noting current indicators point to robust investment inflows, strong market appetite, lower borrowing cost, ample liquidity and faster capacity to pay debt.
“The outlook for 2012 is very positive,” said Francisco Sebastian, FMIC chair. “The country is in very good shape with its macro-economic fundamentals still intact.”
Public debt is lower, inflation has eased and government remains serious with its fiscal and reform measures, he said.
However, threats like economic slowdown in China, a protracted debt crisis in the European Union and a weakening of commodities market remain, FMIC noted.
Also, the country is facing the La Niña weather phenomenon until February and that may weaken agriculture output.
Roberto Juanchito Dispo, FMIC president, said the economy will level up this year in terms of macro-economic fundamentals and capital markets.
'De facto upgraded'
Despite the US and European crises, OFW remittances will grow by 5 percent to 7 percent and inflation will stay within 3.5 percent to 3.7 percent because of stable crude oil prices, Dispo noted.
Exports are will also recover from a negative 4.3 percent to 5.7 percent growth while imports will increase by 10 percent, according to the FMIC president.
FMIC sees the peso-dollar exchange rate slip in favor of the US currency at P43:$1 to P45:$1 as the US recovers and outperforms Japan and Europe.
The equities market is likely to perform better, with the Philippine Stock Exchange index hitting 5,000 by year's end because of low interest rates, slower inflation and a credit rating upgrade, according to the Metrobank Group unit.
Growth drivers will include consumer spending, investments in tourism sector, and infrastructure development under the Aquino administration’s public-private partnership program.
Monetary policy will relax the first quarter and stay relatively stable the rest of the year.
As such government securities will have relatively low rates, including 3 percent for 91-day Treasury bills, 4.75 percent for 5-year and 10-year notes and bonds, and 6 percent for 25-year notes.
With this outlook, the Philippines is “de facto upgraded” with both onshore and offshore markets already pricing the country's debt instruments at investment grade levels, said.
He cited the sale of $1.5-billion, 25-year global bonds last week at a yield of 5 percent.
Last year, Fitch Ratings raised the country's long-term foreign currency bond to BB+ from BB or a notch below investment grade. Moody's Investors Service also upgraded Philippine currency bonds to Ba2 from Ba3.
Higher credit ratings lower the price of a nation’s debt and allow governments to easily borrow for infrastructure projects, and an investment grade attracts global institutional investors. — VS, GMA News
FMIC, a unit of Metrobank Group, is “cautiously optimistic” about the Philippine economy, noting current indicators point to robust investment inflows, strong market appetite, lower borrowing cost, ample liquidity and faster capacity to pay debt.
“The outlook for 2012 is very positive,” said Francisco Sebastian, FMIC chair. “The country is in very good shape with its macro-economic fundamentals still intact.”
Public debt is lower, inflation has eased and government remains serious with its fiscal and reform measures, he said.
However, threats like economic slowdown in China, a protracted debt crisis in the European Union and a weakening of commodities market remain, FMIC noted.
Also, the country is facing the La Niña weather phenomenon until February and that may weaken agriculture output.
Roberto Juanchito Dispo, FMIC president, said the economy will level up this year in terms of macro-economic fundamentals and capital markets.
'De facto upgraded'
Despite the US and European crises, OFW remittances will grow by 5 percent to 7 percent and inflation will stay within 3.5 percent to 3.7 percent because of stable crude oil prices, Dispo noted.
Exports are will also recover from a negative 4.3 percent to 5.7 percent growth while imports will increase by 10 percent, according to the FMIC president.
FMIC sees the peso-dollar exchange rate slip in favor of the US currency at P43:$1 to P45:$1 as the US recovers and outperforms Japan and Europe.
The equities market is likely to perform better, with the Philippine Stock Exchange index hitting 5,000 by year's end because of low interest rates, slower inflation and a credit rating upgrade, according to the Metrobank Group unit.
Growth drivers will include consumer spending, investments in tourism sector, and infrastructure development under the Aquino administration’s public-private partnership program.
Monetary policy will relax the first quarter and stay relatively stable the rest of the year.
As such government securities will have relatively low rates, including 3 percent for 91-day Treasury bills, 4.75 percent for 5-year and 10-year notes and bonds, and 6 percent for 25-year notes.
With this outlook, the Philippines is “de facto upgraded” with both onshore and offshore markets already pricing the country's debt instruments at investment grade levels, said.
He cited the sale of $1.5-billion, 25-year global bonds last week at a yield of 5 percent.
Last year, Fitch Ratings raised the country's long-term foreign currency bond to BB+ from BB or a notch below investment grade. Moody's Investors Service also upgraded Philippine currency bonds to Ba2 from Ba3.
Higher credit ratings lower the price of a nation’s debt and allow governments to easily borrow for infrastructure projects, and an investment grade attracts global institutional investors. — VS, GMA News
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