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DESPITE
having sound fundamentals, the Philippines should still
watch out as the United States, its major importer, is
hit by dampened consumer spending.
“The
Philippines should watch out for that slowdown; we can’t
expect exports to be a strong positive contributor to
growth this year,” UBS Investment Bank economist Paul
Donovan told reporters on Wednesday.
Donovan,
global economics managing director, UBS Investment
Research of London-based UBS Ltd., explained, though,
that the beatings the market took a week ago do not
reveal that the Philippine economy is slipping into a
crisis.
“In
fact, we’re seeing the
Philippines
as strong; stronger than its Southeast Asian neighbors,
even
Europe and
Japan,” Donovan told BusinessMirror after the press
conference before he flew out of Manila.
He
forecast a full-year 5.8-percent GDP growth rate, mainly
spurred by increased consumption and investments in key
sectors.
Exports
account for almost 40 percent of the country’s gross
domestic product.
“While
exports, mainly to the US, would hit, based on our
estimates, a 5.6-percent growth, with an expected
2-percent growth in the US economy this year, this
represents a light impact [on] growth,” Donovan said.
Donovan
said the United Bank of Switzerland sees the Philippines
current account surplus hitting US$5.5 billion this
year.
“It is
lower than last year’s but still a reasonable number,”
he added. Current accounts are composed of earnings from
abroad and include remittance from overseas Filipino
workers.
He said
Filipino companies selling products for sale to the US
market should expect a decrease in their earnings as
that country’s automotive sector continues to experience
weaknesses.
“There
will be a slowdown in demand for some merchandise and
would be slightly negative for net exports for the
Philippines” Donovan added.
Still,
he said there would be demands for some sectors of the
economy.
Exporters have another reason to be less than happy with
this as the Philippine peso’s strengthening by 1 percent
year-to-date.
Donovan
said UBS expects the peso to stay at P48.50 against the
US dollar this year, a reflection of major currencies’
relationship with the greenback.
Still,
Donovan described this as a “modest” appreciation. The
current volatility in the market, he said, is temporary
and present small problems for the Philippines.
“There
is still room to expand for the Philippines economy. You
should be looking for modest rebounds and slowly sustain
that growth,” he added. |
