Metrobank Research upgrades 2013 PHL growth forecast to 7%

Listed Metropolitan Bank & Trust Co. hiked its Philippine economic growth forecast for the year to 7 percent, following the country's stellar output in the first quarter. 

 

“With initial indicators pointing to a still strong domestic economy, previous full-year forecast of 6 percent is revised higher to around 7 percent,” Metrobank Research Group reported Tuesday in its “Weekly Views from the Metro.” 

 

Metrobank's revised forecast now falls at the upper-end of the government's 6 to 7 percent growth target and is faster than 2012's revised 6.8 percent gross domestic product (GDP) expansion. 

 

In a telephone interview, Metrobank research head Ildemarc Bautista told GMA News Online, “First quarter last year saw a drop in investments, hence the growth in the first quarter this year. With waning effects of election-related spending, growth may ease to 6 percent in the third and fourth quarter of this year.”

 

On the demand side, the surprising top performer was investment spending, which posted a rebound of 47.7 percent from a contraction of 31.3 percent in the same quarter last year, Bautista noted. 

 

“But if investment spending—particularly by the private sector—picks up, you can get more than 7 percent for this year. What we're essentially saying is that the economy can at least grow by 7 percent,” he added. 

 

Consumer spending as well as growth in the services and industry sectors are the major catalysts to growth this year, the bank said.   

 

“Consumer spending will still be supported by robust OFW (overseas Filipino worker) remittances and the well-anchored inflation expectations,” the report read. 

 

“The rosy outlook for the real estate and tourism sub-sectors will still underpin the services sector growth. Furthermore, the sustained growth in private construction is also seen to support overall industry sector and investment spending growth,” it read further. 

 

The revision came on the heels of a government report saying the economy grew by 7.8 percent in the first quarter, the fastest in Asia. 

 

Robust growth, however, is not stoking inflation. Metrobank forecasts inflation to settle at 3 percent this year.

 

“Growth is not inflationary. Commodity prices will be very, very benign,” said Bautista. 

 

Metrobank's inflation forecast is at the lower end of Bangko Sentral ng Pilipinas' 3 to 5 percent target and is below the central bank's 3.2 percent projection   

 

“Expect inflation to continue treading at these low levels as food supply remains stable and as oil prices expected to still move with a downward bias,” the report read. 

 

Inflation last April hit 2.6 percent, a 13th month low. The latest inflation figure pulled the year-to-date inflation to 3.0 percent. 

 

May inflation is set for release on Wednesday, June 5. Analysts polled by GMA News Online see inflation last month at 2.65 percent. — VS, GMA News