Manila seen outperforming peers in 2017

The economy is expected to sustain its growth momentum this year, with local output or the GDP seen hitting 7 percent to 7.5 percent for the year, according to First Metro Investment Corp. (FMIC).

At its annual economic and capital markets briefing on Thursday at the Makati Shangri-La Hotel, FMIC President Rabboni Francis B. Arjonillo, along with other economists, explained the country’s GDP this year should average 7 percent to 7.5 percent on the back of higher capital investments.

In the first three quarters last year, GDP averaged 7 percent. Continued growth was seen sustained under President Duterte’s plan to ramp up infrastructure spending, higher foreign direct investment  inflows, increased consumer expenditure, stable overseas Filipino worker (OFW) remittances and strong business-process outsourcing (BPO) revenues.

“The Philippine economy will continue to be robust and outperform its Asean peers in 2017. There will also be a lot of internal and external changes and threats that will impact the country’s economy. But we are optimistic that given our sound macroeconomic fundamentals and compelling investment story, the country’s economy will remain strong,” Arjonillo said.

The economic outlook for 2017 includes inflation rising from 2.8 percent to 3.2 percent due to the expected increase in oil prices, strong domestic demand and a weaker peso.

The inflation rate in December last year averaged 2.6 percent, higher compared to the year-ago rate of only 1.5 percent.

Money sent home by OFWs were to increase by 2 percent to 4  percent, as output growth in the United States was seen to improve this year. Cash remittances reached 3 percent last October, lower compared to the 4.2 percent reported in the same period the previous year.

It was explained that exports were to rebound this year with a growth outlook of 5 percent to 8 percent; the growth also being attributed to the strengthening of the US economy.

The country’s exports for October 2016 reached 3.7 percent, while 2015 figures for the same month recorded a decrease of 10.8 percent, according to data from the Philippine Statistics Authority.

Imports were seen posting double-digit growth, its growth potential expected to reach 10 percent to 14 percent, mainly driven by capital spending and higher oil imports. Imports to the Philippines reached 5.9 percent for October of 2016, with 2015 figures rising to 16.9 percent.

The Philippine peso was seen trading at a high of P51 to the US dollar, as the greenback gains more traction this year on the back of the strengthened US economy.

According to University of Asia and the Pacific professor and economist Bernardo M. Villegas, the sources of growth for the Philippines will come from its young demographics, the BPO sector, infrastructure buildup, domestic tourism, remittances, public-private partnerships, enhancements on agriculture and the manufacturing sector.

“These are the areas of relative certainty. First, we definitely have for a long time to come within the next 30 years—the jewel of our economy, the young, growing and increasing population. There are more than 10 million workers around the world sending $25  million to $26 million. We won’t have them, unless we have a growing population,” Villegas said.