FMIC: Second quarter PHL growth at least 7.5%

First Metro Investment Corp. (FMIC), the investment vehicle of the Metrobank Group, sees Philippine output settling above the government's growth goal in the second quarter, according to a report released Friday.

In its July issue of “The Market Call,” published together with University of Asia and the Pacific, FMIC said it expects Philippine gross domestic product (GDP) to grow by at least 7.5 percent in the first quarter.

The projection is above the government's 6 to 7 percent growth goal for 2013 and compares to the 7.8 percent expansion recorded in the first three months of the year.

“The manufacturing sector should positively combine with construction and the mining sectors to lead Q2 (second quarter) GDP growth to 7.5% or higher,” the report read.

Output in the manufacturing sector surged to a seven-month high in May as factories churned faster feeding domestic demand.

“The Q2 GDP outlook is equally sanguine as in Q1 (first quarter) as peso appreciation is likely to slow down, exports to rebound, and inflation to remain manageable,” it added.

Latest government data show the exports contraction easing in May, fueling beliefs that a trade recovery could be underway.

FMIC said exports will rebound in the coming months “on the back of a more robust US economic recovery, but will be barely positive for the whole year.”

“Since, the recent economic growth has been domestic demand driven, exports will have a minimal impact on the growth trajectory,” it added.

Inflation, meanwhile, averaged at 2.9 percent in the first half or below the central bank's 3 to 5 percent target, allowing monetary authorities to keep policy settings at an expansionary stance.

FMIC also noted that the peso “appears to have found a new equilibrium in the P42-44 range.”

“Although the trend will be towards depreciation, the seasonal inflow of dollars from OFWs (overseas Filipino workers) in Nov-Dec should provide support and result in a minor appreciation,” the report noted. — KBK, GMA News