PH growth to hit 6.5% in Q4 - think tank
MANILA, Philippines - Even with billions of pesos worth of damage to the agriculture sector after typhoon Pablo, the Philippine economy will still be able to post a 6.5% growth in the fourth quarter of 2012, according to a local think tank.
In its latest Market Call report released Thursday, December 20, First Metro Investment Corp.'s and University of Asia and the Pacific's Capital Markets Research Center said economic growth may even be higher next year because of the elections and the start of many Public-Private Partnership (PPP) projects.
"Although faced by a higher base in the fourth quarter 2011, this year’s fourth quarter should be at least as good as the first to third quarter average GDP (gross domestic product) growth of 6.5%, since infrastructure spending is going full blast, especially with the May elections in sight. We expect to see a further acceleration in the growth pace in 2013," the report stated.
For the rest of 2012, the think tank said forecasted GDP growth to settle at slightly below 7%.
The local think tank said growth will be boosted by low inflation rate, which the government expects to average 3.2% this year.
It added that the country's deficit will be lower than P200 billion at around 1.8% of GDP. This will result in a lower debt-to-GDP ratio of around 48.8% this year.
The lower deficit and debt are due to better tax collections. The think tank said this trend will continue, following the approval of the sin tax law, which will raise an additional P34 billion revenues.
"We expect a further decline in the deficit percentage in 2013, as tax collections gain traction with a faster moving economy, the approved hike in sin taxes... and improved tax administration," the Capital Markets Research Center said.
"By next year, the country will have a lower debt ratio than Thailand - and it was already lower than Malaysia in 2011," it added.
The think tank said export growth in September likely picked up from August. With this, it expects fourth quarter growth to be in the 5% to 8% range.
The attractiveness of the domestic stock and bond markets will push the peso to strengthen against the US dollar, it said. The peso is seen to average P41.12 and P41.11 per dollar in November and December, respectively.
However, the think tank said the Bangko Sentral ng Pilipinas will likely intervene to cap the peso's rise because of its harmful effects on exporters' incomes and overseas Filipino worker remittances. - Rappler.com