CEBU, Philippines - With the continuing rebuilding efforts in typhoon-stricken areas and public works, an investments executive predicts the nation's economic growth to bounce back in the second quarter of this year.
Although the first quarter 2014 gross domestic product slowed down to 5.7 percent from 6.3 percent in Q4 of 2013, it is expected to increase a little bit higher at 6.2 percent growth in the Q2 this year, said Michael Gerard Enriquez, chief investments officer of Sun Life Financial.
GDP is the amount of final goods and services produced in a country and serves as measure for economic performance.
The enormous damage of Typhoon Yolanda and the Bohol earthquake last year had likely taken toll on the country's GDP in the first half of 2014.
But as recovery efforts have been expected lately, the economy is likely to recover if the government continues to spend for public infrastructures and investments, Enriquez noted.
"We see some movements already in provinces hit by typhoon Yolanda," he said during a press conference in Cebu Thursday, adding that the country won't be able to sustain growth if it lacks good infrastructures and spending for public works.
Although foregin investors were slowly observed getting out of the nation -- in favor of U.S. and European markets -- on the latter part of 2013 because of effects of disasters, the investments officer said foreign funds started to come in the early part of this year.
This after these investors have realized that despite the challenges of the recent calamities, he said, the Philippine economy remains "very resilient and continues to be strong."
He also added the country's equities market, which has gained a 16.8 percent growth,is so far one of best performing markets in the world.
Fortunately, the controversies about the Priority Development Assistance Fund scam and the Disbursement Acceleration Program have not directly affected the market's condition.
However, the agenda and strong presidential candidates in 2016 elections and the change of cabinet members may affect on how investors perceive the market, Sun Life's Enriquez added.
"It would definitely reflect the overall (situation) but I think most of the disruptions on the movement of the market due to the election would just be temporary," he believed, noting that if the next administration will be business friendly, foreign investors will surely take it positively.
He explained the domestic spending and the investors' positive sentiments toward the new government is usually reflected on the market outlook.
While growth continues to be well-managed in terms of inflation, the possible changes in interest rates and the ongoing crisis between the executive and judicial departments of the government may have an impact on the financial markets.
But Enriquez is confident that these pending problems will be surpassed by strong liquidity and the general resilience of the country.
He added corporate earnings are also expected to grow in the furture.
On another note, the looming ASEAN economic integration may not really pose yet big changes in the finance and banking sectors, Enriquez noted, saying that the full integration of these sectors will still be in 2020.
He said the government through the Securities and Exchange Commission is still identifying on how the Philippines can fully participate in the said integration. He further added the the move of smaller banks to merge with bigger ones are steps of the sector to prepare for the AEC. (FREEMAN)