HSBC raises 2016 PHL growth forecast to 6.8% as GDP swells

The Hongkong and Shanghai Banking Corp. (HSBC) has raised its Philippine growth forecast for the full year 2016 as the country exceeded expectations about the third quarter gross domestic product (GDP) results.

The global banking giant revised its growth forecast for the year to 6.8 percent from 6.5 percent this year, according to a report penned by HSBC economist Joseph Incalcatera.

As measured by the GDP, the economy grew by 7.1 percent in the third quarter of the year, the fastest among major Asian emerging markets, and beating median expectation at 6.8 percent.

In the next two years, HSBC placed the GDP to grow by 6.5 percent citing the high base of 2016.

"The growth data show that the Philippine growth story remained intact in the third quarter," Incalcatera said.

"The 7.1 percent year-on-year expansion in the third quarter is Asia’s strongest Q3 print to-date, and points to the resilience of the Philippine economy in a soft global growth environment," he added.

The HSBC economist noted the government is tracking well within its 6 to 7 percent full-year target as the economy expanded by 7 percent during the first nine months.

Asian Institute of Management economist Emmanuel Leyco is forecasting a higher trajectory for the whole of 2016.

"I think it would be more like 6.9 percent assuming that the last quarter would remain on the high spectrum," Leyco said on Friday.

In the HSBC report, Incalcatera took note the election of Donald Trump as President of the United States introduces some risks to growth due to the likelihood of protectionist policies.

"But we believe risks to the Philippines are manageable and more limited than elsewhere. The biggest risk comes from the BPO (business process outsourcing) sector, which employs approximately 1.2 million Filipinos and earns roughly 70 percent of revenues from the US," he said.

Leyco earlier noted the BPO industry might suffer economic headwinds from a Trump presidency if he starts taking steps to fulfill his campaign pronouncement of imposing taxes on US companies that outsource jobs abroad. 

Incalcatera, however, said the risks may be mitigated because there is little direct competition with American workers and President Rodrigo Duterte appears to have struck a more conciliatory tone concerning future cooperation with the US. — VDS, GMA News