Economist forecasts 6.4% economic growth this year

MANILA, Philippines - Maybank ATR Kim Eng expects the Philippine economy to grow 6.4 percent in 2013, bolstered by the likelihood an investment-grade status by international credit rating agencies will be clinched this year.

Luz L. Lorenzo, chief economist of Maybank ATR Kim Eng, said inflation would remain benign at four percent while the current account will remain at 1.7 percent of GDP to $4.6 billion. International reserves will increase to $87 billion.

The 91-day Treasury Bill (T-bill) is seen to average at 2.1 percent, while the peso will be valued at 39.90 to the dollar, she added.

“We are a private consumption-driven economy, which is about 70 percent of GDP, but we need to invest more especially in both private and public infrastructure,” Lorenzo said.

The economist said the Philippines sustain will growth by increasing government investment in critical areas of infrastructure, social spending (health and education) through PPP projects that help maintain fiscal stability.

She added that government should increase or attract more foreign direct investments (FDIs) especially in the mining industry.

“Government must also implement prudential measures to deal and manage inflows of portfolio investment,” Lorenzo added.

Remittances from overseas Filipinos will continue to grow, adding another five percent to over $21 billion.

Credit account surpluses will also be driven by the outstanding gains of the business process outsourcing (BPO) sector as well as the tourism business.

Meanwhile, Maybank chief economist P.K. Basu said the Philippines has emerged as a tiger economy in the region, with the country’s bourse among the best performing.

“The Philippines deserves the credit upgrade, it is already a new creditor from languishing as a borrower for a long time,” he said at an economic forum held at the ResortsWorld in Pasay City.

Corporate income is likewise forecast to expand 14 percent while bank loans will grow another 16 percent.

The Maybank ATR Kim Eng economists said the P1.8 trillion worth of special deposit account (SDAs) is looking for new and better investment opportunities.

Meanwhile, corporate earnings will come from infrastructure investments, consumer lending including real estate and automobile, energy distribution and generation, banking and finance, and mining.

The economists gave particular focus on the 30 exchange traded funds (ETFs) in the world market with Philippine exposure, which reportedly have a new asset value of over $400 million.