Goldman Sachs sees RP growing 4.2% in 2010

MANILA, Philippines - New York-based investment bank Goldman Sachs sees the country’s domestic output  growing faster at 4.2 percent next year on the back of continuing fiscal stimulus as well as robust remittances from overseas Filipino workers (OFWs).

Goldman Sachs said in its Asia Economics Data Flash entitled “Philippines 3Q 2009 GDP: Sequential recovery but slower than expected” that the gross domestic product (GDP) would expand by 4.2 percent in 2010 from the projected 1.6- percent growth this year. “We expect growth in 2010 to rise sharply to 4.2 percent from 1.6 percent in

2009,” the investment bank said.

Philippine economic managers see the country’s GDP expanding between 2.6 percent and 3.6 percent next year from about 0.8 percent to 1.8 percent this year. Goldman Sachs said OFW remittances would post a double-digit growth of 12 percent next year faster than the sixpercent growth expected by the Bangko Sentral ng Pilipinas (BSP) and the  International Monetary Fund (IMF).

“We expect loose financial conditions, the impact of the continuing fiscal stimulus and the sharp up-ticks in remittances to be supportive of domestic demand over the next few quarters and to somewhat mitigate the negative impact of the typhoons this year,” the investment bank said.

Latest data from the central bank showed that OFW remittances expanded by 4.2 percent

to $12.789 billion during the first nine months of this year from $12.273 billion in the

same period last year.

Data from the National Statistical Coordination Board (NSCB) showed that the country’s

GDP expansion slowed to 0.7 percent in the first nine months of the year from 4.2

percent a year ago.

This after the GDP grew by a slower-than-expected 0.8 percent in the third quarter of the year from 4.6 percent in the same quarter last year. The National Economic and  Development Authority (NEDA) projected a 1.6-percent to 2.6- percent GDP growth in the third quarter.

Goldman Sachs said the weak GDP growth in the third quarter and the downward  revision in the second quarter figure to 0.8 percent from 1.5 percent put some downside

risk to its projected 1.6-percent growth forecast this year.

The investment bank, however, said it expects a much s t ronger-than-expected growth in the fourth quarter due to strong OFW remittances leading to signs of credible recovery over the next few quarters.