2013 Phl GDP forecast at 5.5%

MANILA, Philippines - New York-based think tank Global Source Partners upgraded the country’s gross domestic product (GDP) growth forecast to 5.5 percent instead of five percent next year due to higher spending as well as the strong rebound in exports.

In a report, former Finance undersecretary Romeo Bernardo and economist Margarita Gonzales said the country’s GDP growth is expected to accelerate further next year on the back of higher export earnings as well as election spending.

“The outlook for next year should be better at about 5.5 percent growth, given that it is an election year and with possibly stronger export growth in view of moderate improvement in the world economy,” Bernardo and Gonzales said.

However, Global Source decided to stick to the GDP growth forecast of 4.5 percent this year due to the delay in the take off of major infrastructure programs under the public private partnership (PPP) scheme to economic growth uncertainties in advanced economies led by the US as well as the sovereign debt crisis in Europe.

“Given the external uncertainties and the possible impact on exports and remittances, we temporarily keep our forecast at 4.5 percent this year, though taking note of strong business sector optimism and what looks to be robust domestic spending, even without the PPP,” Bernardo and Gonzales said.

Based on the latest World Economic Outlook (WEO) of the International Monetary Fund (IMF), the world GDP is expected to expand by 3.7 percent this year and 4.1 percent next year.

“Up until recently, it seemed like things were finally getting better for the world economy. But recent developments have shown how fragile the global economy really is, with troubles returning to the euro zone,” Global Source stated in the report dated May 21.

As such, the think tank retained this year’s GDP growth forecast of 4.5 percent but upgraded next year’s projection to 5.5 percent instead of five percent.

“So far, the central scenario remains to be a moderately positive one about 4.5 percent growth this year and 5.5 percent the next, in our estimate-with bright private consumption and public spending as well as dark spots downside risks to the global economy and fragile export recovery,” Bernardo and Gonzales said.

Global Source said inflation is expected to ease to 3.6 percent this year before picking up to 4.5 percent next year or well within the target of three percent to five percent set by the Bangko Sentral ng Pilipinas (BSP).