PHL economy to grow 4.2% this year, says Singapore’s DBS
Philippine output or gross domestic product will grow 4.2 percent this year and 5.2 percent in 2013, largely on higher government spending low interest rates, Singapore’s DBS Bank Ltd. said in a report Tuesday.
Poor global demand and insufficient domestic demand have turned 180 degrees, DEB economist Eugene Leow noted in a country report, “Philippines: Cushion in Place,” in the bank’s Q2 2012 Economics Market Strategy.
“This should translate into GDP growth of 4.2 percent in 2012 and 5.2 percent in 2013,” said Leow.
Philippine output grew 3.7 percent last year, from 7.6 percent in 2010 as a sputtering US economy, the euro debt crisis, and the natural disasters in Asia weakened global demand and disrupted the industrial supply chain. The Philippine situation was aggravated by the Aquino administration’s underspending.
“However, the situation has changed for the better. In the coming quarter, domestic demand will be bolstered by low interest rates and a ramp up in government spending,” according to the DBS economist, citing an imminent recovery of the country’s electronics sector.
In the first quarter, the Philippine GDP will expand by 3.5 percent, 4.2 percent in the second, 4.6 percent in the third, and 4.5 percent in the fourth quarter, the bank said.
Slower private sector spending
The Philippines’ Development Budget Coordination Committee (DBCC), made up of economic departments, expects the GDP to expand between 5 percent and 6 percent this year.
Government spending would expand by 7.9 percent this year and 4.1 percent next year, fueled by the public private partnership (PPP) program, according to DBS.
Public sector spending contracted by 0.7 percent last year.
Still, DEB sees private spending growing at a slower 5.5 percent this year and 5 percent next year, from 6.1 percent last year.
“Government spending should also be kicked up several notches in the first half of 2012 as the authorities continue to frontload expenditures… Once the projects are bid out, the resulting positive investment on investment growth should start to materialize in the second half,” said Leow.
Inflation, averaging four percent this year and 4.7 percent next year, will allow the Bangko Sentral to keep interest rates low. Thus, boosting consumption and supporting credit and economic growth, Leow added.
While inflation would trace a mild uptrend from mid-2012, Leow said it should not prompt monetary tightening this year — that would likely happen in the first quarter of 2012.
The Bangko Sentral sees inflation averaging between 3 percent and 5 percent this year and next year.
Key interest rates are 4 percent for overnight borrowing and 6 percent for overnight lending. — VS, GMA News
Poor global demand and insufficient domestic demand have turned 180 degrees, DEB economist Eugene Leow noted in a country report, “Philippines: Cushion in Place,” in the bank’s Q2 2012 Economics Market Strategy.
“This should translate into GDP growth of 4.2 percent in 2012 and 5.2 percent in 2013,” said Leow.
Philippine output grew 3.7 percent last year, from 7.6 percent in 2010 as a sputtering US economy, the euro debt crisis, and the natural disasters in Asia weakened global demand and disrupted the industrial supply chain. The Philippine situation was aggravated by the Aquino administration’s underspending.
“However, the situation has changed for the better. In the coming quarter, domestic demand will be bolstered by low interest rates and a ramp up in government spending,” according to the DBS economist, citing an imminent recovery of the country’s electronics sector.
In the first quarter, the Philippine GDP will expand by 3.5 percent, 4.2 percent in the second, 4.6 percent in the third, and 4.5 percent in the fourth quarter, the bank said.
Slower private sector spending
The Philippines’ Development Budget Coordination Committee (DBCC), made up of economic departments, expects the GDP to expand between 5 percent and 6 percent this year.
Government spending would expand by 7.9 percent this year and 4.1 percent next year, fueled by the public private partnership (PPP) program, according to DBS.
Public sector spending contracted by 0.7 percent last year.
Still, DEB sees private spending growing at a slower 5.5 percent this year and 5 percent next year, from 6.1 percent last year.
“Government spending should also be kicked up several notches in the first half of 2012 as the authorities continue to frontload expenditures… Once the projects are bid out, the resulting positive investment on investment growth should start to materialize in the second half,” said Leow.
Inflation, averaging four percent this year and 4.7 percent next year, will allow the Bangko Sentral to keep interest rates low. Thus, boosting consumption and supporting credit and economic growth, Leow added.
While inflation would trace a mild uptrend from mid-2012, Leow said it should not prompt monetary tightening this year — that would likely happen in the first quarter of 2012.
The Bangko Sentral sees inflation averaging between 3 percent and 5 percent this year and next year.
Key interest rates are 4 percent for overnight borrowing and 6 percent for overnight lending. — VS, GMA News
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