MANILA, Philippines - The economy is expected to sustain its growth throughout this year, as the industry and manufacturing sectors, and construction are foreseen to buoy the expansion.
"We hope to see a more vibrant industry sector. We see an improved manufacturing sector buoyed by the semiconductor and electronics industry, as the world economy is expected to recover between 2013 and 2014," socioeconomic planning Secretary Arsenio Balisacan said in a briefing in December.
"Construction is also expected to grow robustly in 2013 due to the onset of major public infrastructure projects and additional boost coming from private construction, while utilities will be driven by the growing demand for power, water and gas," he continued.
The government aims to grow the economy by 6% to 7% this year, from the 5% to 6% target in 2012. But Balisacan said the National Economic and Development Authority forecasts the economy to breach that target for 2012, as the gross domestic product (GDP) is expected to have hit around 6.5% last year.
The expansion in 2012 was supported by strong consumer and public spending, and the services sector--led mainly by the business process outsourcing (BPO) industry, Balisacan has said.
And for this year, the services sector is expected to continue driving the economy, he noted.
"For the services sector, the continuous expansion in the IT-BPO industry, tourism, financial intermediation, and trade are seen to fuel growth," Balisacan said.
"On the demand-side, household consumption will remain robust, and the expected expansion of exports and construction will further boost growth. Capital formation, especially in the private sector, is expected to contribute a greater share of overall growth."
The main risk to domestic growth continue to be global headwinds as debt woes in the euro area persist and the US face a fiscal cliff.
However, Singapore-based DBS has a less optimistic take on the Philippine economy for 2013, as the bank forecast a 5.3% growth, below the government target.
"With economic momentum still going strong, we have revised up our 2012 and 2013 GDP growth forecasts to 6.2% (5.7% previously) and 5.3% (5.0% previously) respectively," according to a recent quarterly report.
The revision was made after the stellar 6.5% growth achieved by the domestic economy in the nine months to September in 2012, DBS stressed.
"Consumption and investment will stay as key drivers of growth amid a low inflation environment. Monetary policy is also expected to stay accommodative and any form of tightening to come only in late 2013," DBS said.
"Our core scenario also only factors in a mild recovery in export demand. If electronics demand marks a sharp turnaround in the coming months, there would be considerable upside risks to our forecasts," the bank added.
For its part, the Bangko Sentral ng Pilipinas, in a year-end report, said that despite what appears to be an improvement in global conditions, challenges that could impact on the Philippine economy remain.
"The economy needs to be able to address any economic fallout, such as a decline in external trade, any consequent waning of domestic demand," the central bank said.
The domestic economy should also be able to respond to "increased financial market volatility, that may arise from negotiations on the US fiscal cliff, the continued debate in Europe on how to handle their debt crisis, and changes in the growth trajectory of our major trading partners including China and the ASEAN countries," BSP added.