Investment bank Barclays raises 2013 PHL growth forecast to 6.8%

British investment banking giant Barclays raised its Philippine economy growth forecast for the third time this year, taking into account the strong first quarter output. 

 

“GDP rose 7.8 percent year-on-year in the first quarter, and even assuming some moderation in that pace, we raise our 2013 growth  forecast 60 basis points, to 6.8 percent,” Barclays said in its research note “Global Economics Weekly” released over the weekend. 

 

In May, Barclays raised its 2013 Philippine growth forecast to 6.2 percent from a revised 5.9 percent forecast in January. Initially, the British bank saw Philippine output hitting 5.6 percent this year.  

 

Barclay's latest forecast is near the higher-end of government's 6 to 7 percent growth goal. “Growth remains solid,” according to the bank. 

 

Last May, the National Statistical Coordination Board reported the economy grew by 7.8 percent in the first quarter, the fastest among  Asian economies.  

 

Barclays also sees GDP growth in 2014 easing to 6.5 percent—an upward adjustment from its previous forecast of 6.3 percent. 

 

Robust gross domestic product (GDP) growth, however, is not expected to stoke inflation. Barclays maintains that consumer prices will remain in check, allowing the central bank to keep policy at an expansionary stance. 

 

The investment bank noted inflation will remain low at 3.8 percent and 4.1 percent for 2013 and 2014, respectively. “Inflation remains contained in the Philippines,” the bank said, noting “well behaved” food prices, which accounts for the bulk of the consumer price index.

 

In May, inflation settled at 2.6 percent, unchanged from a month earlier. The May figure pulled inflation for the first five months of the year to 3 percent—at the lower end of Bangko Sentral ng Pilipinas's 3 to 5 percent target. 

 

“With benign inflation and growth relatively robust, we expect Bangko Sentral ng Pilipinas to keep the policy rate unchanged” this year, said Barclays. 

 

Since October, policy rates—which serve as benchmark for bank loans—have been at record lows of 3.5 percent for overnight borrowing and 5.5 percent for overnight lending. This has allowed corporations and individuals to borrow and spend for less, helping the economy expand. — VS, GMA News