MANILA, Philippines - A US-based think tank has raised its growth forecast for the Philippines this year, as it expects the economy to be fueled by higher government expenses, election-related spending and more private investments.
In a research note, Global Source said the Philippines' gross domestic product (GDP) may grow by 6.1% in 2013, higher than its previous estimate of only 5%.
"We hinge our higher-than-consensus growth forecast on the domestic macro policy environment continuing to be supportive particularly in terms of higher government spending, further expansions in private investments, and election spending aiding consumption growth," it said in the report.
However, the forecast for 2013 is lower than the Philippines' 6.6% GDP growth last year.
"We expect the pace of growth to slow a bit in 2013 as weak external growth and a strong local currency weigh down exports," the think tank said.
Global Source identified several factors that can drag down the Philippines' growth, such as deeper recession in Europe and sharper fiscal contraction in US, and China's failure to pick up the slack.
"Tensions in the Middle East may again flare up reversing the forecast downtrend in oil prices. Internally, remaining bureaucratic bottlenecks may again stall government spending keeping a lid on investment ratios and souring investor moods," it added.
The Philippines may need to rely on domestic sources of growth in the near term to offset these external shocks.
"The increasingly upbeat local mood suggests that private players are ready to act. Already, major companies active in the Philippine business scene are observed to be locking in cheap money of fairly long maturities (10 to 15 years) and keenly looking for expansion opportunities," Global Source said.