MANILA, Philippines – The investment banking arm of Metropolitan Bank & Trust Co. and DBS Bank Ltd. of Singapore see the economy expanding by at least six percent this year amid external shocks.
Rabboni Francis Arjonillo, president of Metrobank’s First Metro Investments Corp. (FMIC), said the economy is expected to expand between six and 6.5 percent this year.
Arjonillo said the growth would be fuelled by sound macroeconomic fundamentals and robust domestic consumption.
He also cited the growing business process outsourcing (BPO) sector, stable peso, moderate inflation, and declining oil prices.
“Our outlook for the Philippines remains optimistic, but guarded due to some uncertainties in the local financial markets and global economic weakness. The country’s economic performance will still be among the highest in the region,” he said.
DBS sees the country’s GDP expanding by six percent and inflation accelerating to 2.5 percent this year
The Singaporean bank expects the Bangko Sentral ng Pilipinas (BSP) to raise interest rates by 25 basis points in the second half.
“For now, however, the BSP seems fairly sanguine about GDP growth prospect. It is hard to disagree. Domestic demand remains strong, bolstered by private consumption growth,” DBS said.
FMIC believes the country’s GDP likely expanded by six percent last year from 6.1 percent in 2014.
“We remain optimistic but guarded, more reserved, and more attentive to local and international developments that seem to hold back the Philippines from taking off as we have hoped in the past year or years,” FMIC chairman Francisco Sebastian said.
Economist Vic Abola of the University of Asia and the Pacific said the projected GDP growth this year has ºfactored in a five percent contraction in the agriculture sector due to the severe El Niño weather condition.
He also noted the positive impact of the presidential and national elections scheduled in May this year on the economy.
Abola said the country’s inflation would pick up to 2.5 percent this year from 1.4 percent last year as lower oil prices as well as more rice imports would cushion the impact of El Niño on the agriculture sector.
The economist said the peso would further weaken to 48 to 49 per $1 this year after shedding off 5.2 percent to close at 47.06 to $1 in end-2015.
FMIC sees the growth of cash remittances from overseas Filipinos slowing down to as much as two percent this year as oil producing countries suffer from low oil prices.