MANILA, Philippines - The Philippine economy is expected to slow down this year to 6.7 percent from 7.2 percent in 2013, due to modest growth in consumer spending as government projects have yet to fully take off, a Standard Chartered Bank official said.
In a press briefing, StanChart chief investment strategist for group wealth management/consumer banking Steve Brice said they see “upside risks” which may affect the economy such as the moderate growth in exports and unclear timetable for infrastructure development implementation.
“Clearly infrastructure is a major challenge. We all wish infra can be implemented faster,” he said.
“We are watching further progress on the government’s Public-Private Partnership (PPP) infrastructure projects. Given that President Aquino’s term ends in mid-2016, his administration will need to roll out these projects in 2014 and 2015,” it said.
StanChart noted that while the Philippines has made progress in international rankings, it still suffers from underinvestment and a lack of infrastructure relative to the rest of the region.
As of November 2013, out of a total 44 listed projects, only the third and fourth PPP projects were awarded in 2013, while seven more are still in the bidding stage.
In its latest Global Focus report released yesterday, StanChart, meanwhile, noted that “(Philippines’) growth momentum is likely to moderate after a stellar 2013 but remain robust”.
“We forecast 6.7 percent in 2014, in line with the government’s forecast range of 6.5 to 7.5 percent. This would represent a third consecutive year of growth above six percent,” it pointed out.
The bank said the country’s positive growth fundamentals remain intact, although growth is expected to slow slightly from a projected 7.2 percent in 2013 due to base effects.
It also expects investment growth to continue to provide fuel for the domestically driven economy.
“The positive domestic outlook is supported by strong remittance inflows, a robust current account surplus, positive business confidence, and the investment-grade status awarded to the Philippine by credit rating agencies,” it said.
The projected slower growth in economy in 2014 would also be attributed to a slowdown in agricultural activities.
“Agricultural activity will likely take time to recover from the damage from Super Typhoon Yolanda in 2013,” it said.
StanChart, meanwhile, forecasts inflation to rise to a still manageable 3.9 percent in 2014 from 2.9 percent in 2013, reflecting buoyant domestic demand.
“The muted impact of high liquidity on inflation and asset prices has kept inflation low. Food inflation has remained subdued as the country increases its self-sufficiency in rice production and global food prices stay range-bound,” it said.
It warned that inflation rate may go above five percent due to some risks such as supply-chain issues abused by typhoon damage.