BPI revises 2004 GDP growth projection from 4.5% to 5%

The asset management group of the Bank of the Philippine Islands (BPI) has revised its 2004 gross domestic product (GDP) growth forecast to five percent from the original 4.5 percent.

It also expects the peso to stabilize at 55.50 to the dollar for an average of 56 to $1 for this year.

"We view the Philippine economy with guarded optimism. In fact, we are now shifting our portfolio investments from short-term last year to medium to long-term," said BPI senior vice president Adelbert Legasto, who heads the asset management group.

Legasto said the upward revision was prompted by the strong performance of the agriculture sector, the renewed global demand for exports particularly electronic products and the subsequent growth of the local manufacturing sector due to the resurgence of exports in view of the improving economies of Japan and the US.

Legasto said the positive factors still outweigh the negative elements as the political climate seem to have improved after the national elections.

Earnings prospects are improving as seen by increasing investments by both local and foreign investors highlighted by the decision by Calpers to remain in the Philippines.

The bank believes that local equities market has finally bottomed out as confirmed by a 20-percent growth as of end June this year.

"We have broken out of the bear market trendline," Legasto said. "The main targets are now 1,700 within the year, and probably 1,900 within the first semester of 2005."

Foreign investors have started shifting into a net buying position after a brief period of being net watchers, and a prolonged period as net sellers.

The Philippine Stock Exchange (PSE) key indices grew by an average 10 percent in the first three months of the year, considered the third best growth rate in the regional markets.