The Philippine economy is expected to grow stronger this year on the back of the strong performance of the private sector and boosts in government spending and public construction, First Metro Investment Corporation said.
First Metro, the investment banking arm of the Metrobank Group, said it expects the country to sustain its economic gains in 2015.First Metro is projecting the country’s GDP to expand to 7-7.5 percent on expectations of accelerated government expenditure on infrastructure and rehabilitation projects, resurgence of manufacturing, and pre-election spending, supported by strong domestic demand and favorable growth prospects.
“Despite a lower than consensus performance in 2014, the outlook for the Philippine economy in 2015 is very positive underpinned by the strong performance of the private sector and a recovery in government spending and public construction. The country’s economic gains in recent years will be sustained but critical steps have to be undertaken to ensure that these economic gains will continue to benefit us in the long run,” First Metro president Roberto Juanchito Dispo said.
Dispo, however, warned that there are still threats in both the global and local fronts that bring downside risks.
“We see a stronger Philippine economy in 2015 but there are internal and external factors that may bring downside risks. External threats include global economic slowdown, sluggish growth in emerging markets, US interest rates hike, and escalated geopolitical tensions in the Middle East. In the local front, natural disasters, power crisis, continued anemic government spending, and delayed PPP projects could dampen growth,” he said.
First Metro expects inflation to soften to 2.7-3 percent this year “as global oil prices dive sharply, private consumption continues to rise, and bottlenecks in the supply of goods resulting from Manila’s truck ban further ease.”
OFW remittances, meanwhile, is expected to slightly move downward to 4.5-6 percent due to the effects of lower oil prices to oil-producing Middle East countries, where most OFWs are based.
First Metro added that exports growth will be sustained at 9-13 percent driven by the strengthening of the global manufacturing industry, the US economic recovery, and the weakening peso.
Imports of goods and services, on the other hand, will grow at a slower pace at 2-5 percent due to the contraction in electronic imports, other raw materials, machinery, and other mechanical appliances.
First Metro also expects the US dollar to further strengthen as a result of an improving US economy. The peso, which averaged P44.39 to a dollar in 2014, is estimated to average at P45-47 to $1 in 2015.