MANILA, Philippines - Australia and New Zealand Banking Group Ltd. (ANZ) has revised its 2014 economic growth outlook for the Philippines to 7.3 percent after the gross domestic product (GDP) zoomed by a better-than-expected 7.2 percent last year.
“Following the strong growth in 2013, we have bumped up our 2014 growth outlook to 7.3 percent from 6.9 percent,” Eugenia Fabon Victorino, ANZ economist for Asia and Pacific, said.
ANZ had earlier placed forecast a fourth quarter growth rate of 6.5 percent (downgraded from its previous 6.9 percent) and a full year growth of 6.9 percent (upgraded from its original 6.8 percent).
“We see sustained resurgence in the manufacturing sector in line with industrial production gaining momentum. Loan growth to the manufacturing sector has risen after stalling in the first quarter of 2013,” said Victorino.
She added they expect that the reconstruction efforts after Super Typhoon Haiyan (Yolanda) would support economic activity throughout 2014.
Also, the Bangko Sentral ng Pilipinas (BSP) is expected to start tightening policy rates in the second semester of the year.
“We see both the policy overnight borrowing rate and the special deposit accounts (SDA) rate to steady at 3.5 percent and two percent, respectively, through the first half of 2014,” the bank economist said.
The policy tightening cycle serves as a pre-emptive move ahead to a lower inflation target range of two to four percent for the policy period 2015-2016. The bank expects interest rates to amount to a total of 50 basis points higher by the end of the year.