The $292-billion Philippine economy was seen growing by 6.7 percent this year in terms of local output, or the GDP, on the back of strong consumer and government spending, according to Sun Life Asset Management Co. Inc. (SLAMCI).
SLAMCI Chief Investments Officer Michael D. Enriquez said the increased consumer and government spending, particularly on infrastructure, was to provide the economy the momentum to remain strong and help keep a positive outlook in the months ahead.
“Yes, there are a lot of uncertainties over the near term, but we strongly feel that these are just noise or uncertainties that create some volatilities in the financial markets. The Philippine GDP will continue to grow strong for this year,” Enriquez said.
He earlier anticipated local output growth in 2016 averaging more or less 7 percent, followed by a slightly decelerated expansion, averaging only 6.7 percent in 2017.
Enriquez said the contributors to continued growth in consumption include the remittances of overseas Filipino workers (OFWs) and the business-process outsourcing (BPO) sector. The government plan to pursue more infrastructure projects to create more jobs for Filipinos.
“The two growth drivers for consumption are still present, and, in fact, continue to be very strong in spite of a lot of speculation that OFWs and BPOs are slowing down. In fact, they are continuously rising. OFW remittances have been growing at a more steady pace, compared to BPO, which has been growing at a faster pace,” he added.
The insurer also earlier said continued growth in the fourth quarter of 2016 should average 7.2 percent, mostly driven by the industry sector.
“Our own take would be about 7.2 percent [for the fourth quarter], this is mainly driven by an increase in industrial production. That is something positive for the country. For 2017 it might slow down a bit because of the absence of election spending,” Enriquez said.
The increase in infrastructure developments in the country is something that investors are closely watching, seeing that this can significantly boost the growth of the Philippine economy.
“[We are] hoping that this new government with a thrust on spending more on infrastructure, focusing on public-private partnerships, reviewing some of the recent projects and, hopefully, expediting bidding processes, is something that can boost the economy and immediately translate to higher asset prices of equity markets,” he said.
The increased spending on infrastructure should also enable the government to provide more jobs for the population and reduce the unemployment rate. The government should also tap the country’s tourism sector seen to contribute to the growth of the economy.
“We would want to see more quality jobs, especially in manufacturing. This is a more sustainable sector when it comes to providing jobs in the country; manufacturing is something we can bank on which is more sustainable in the long term,” he added.
SLAMCI said so long as the positive drivers remain present, namely, consumption, infrastructure spending and improvement in the manufacturing industry, among others, the country’s economy should remain strong and continue to expand.
“Overall, we continue to expect the economy to grow this year to about 6.7 percent. Growth drivers continue to be present,” he said.
Image credits: Nonie Reyes