Standard Chartered on Monday joined the ranks of global financial institutions which raised their Philippine economic growth forecast, saying the country is moving towards a “balanced growth” underpinned by the twin drivers of expansion: consumption and investment.
“We now expect the economy to grow faster—6.9 percent in 2013, 6.3 percent in 2014 and 7.0 percent in 2015, mainly boosted by investment growth,” Jeff Ng, economist at the British banking giant in Singapore, noted in an e-mail message to GMA News Online.
Standard Chartered's new projections reflect a significant upgrade from the bank's GDP (gross domestic product) forecasts of 5.8 percent in 2013, 6.3 percent in 2014 and 5.5 percent in 2015 prior to the release of the Philippines' first quarter economic data.
In a June 17 research note, “Philippines—Infrastructure boom to boost growth,” Ng said the Philippines is “moving towards balanced growth, supported by domestic consumption and investment.”
Apart from an improving world economy and the recent upgrade to investment grade by debtwatchers Fitch Ratings and Standard & Poor's, the flagship public-private partnership (PPP) program on infrastructure is seen providing a more stable springboard for foreign and domestic investments.
“We expect the PPP initiative to impact GDP growth significantly in the next three years, while other solid fundamentals—firm household consumption and remittance inflows, the recent upgrade to investment grade, and a gradually improving global economy—support GDP growth in the medium term,” said Ng.
Ng, however, raised a “concern” on whether pace of PPP roll-out can can keep up with private sector investment, saying the program can “ensure that basic infrastructure such as power, water, and transport can cope with increased demand.”
Foreign direct investments (FDI), meanwhile, will also depend on long-term infrastructure development, along with the ease of doing business and strong governance.
“Both local and international investors agree that more needs to be done on the infrastructure front, although most believe there has already been progress,” said Ng.
So far, three projects have been bid out since the flagship program was unveiled in late 2010.
These are: the P1.96-billion Daang Hari-South Luzon Expressway Link, bagged by Ayala Corp. in December 2011; the P16.42-billion School Infrastructure Project Phase I, awarded last year to Citicore Holdings Investment Inc.–Megawide Construction Corp. and BF Corp.–Riverbanks Development Corp. consortia; and the NAIA Expressway projected granted earlier this year to San Miguel Corp.
Seven PPPs are in the so-called “live bidding” stage, while nearly two dozen more are in the review phases, according to the PPP Center, which oversees the programs and projects.
Robust growth, however, is not expected to fan inflation in the next three years. Ng said the Philippines will “maintain strong economic growth and manageable inflation over the medium term.”
The country's economy grew by 7.8 percent in the first quarter, the fastest in Asia. Inflation settled at 3 percent in the five months to May.
Last year, GDP growth was recorded at 6.8 percent and inflation at a benign 3.2 percent.
Earlier, foreign banks like Britain's Barclays, Switzerland's UBS and Singapore's DBS also hiked their respective Philippine economic forecasts. — VS, GMA News