The Philippine economy remains strong this year as indicated in the encouraging employment and poverty data, as well as the increased consumption in 2019, according to First Metro Investment Corp. (FMIC).
In its annual economic and capital market briefing on Tuesday, FMIC president Rabboni Francis Sebastian said the country’s gross domestic product (GDP), which is used to determine economic size and growth rate, will grow by 6.2 to 6.6 percent this year.
Sebastian cited higher domestic demand underpinned by magnified consumer spending and the national government’s catch-up plan to boost infrastructure spending to 5.7 percent of GDP as external factors for the favorable forecast.
“The Philippine economy will grow faster in 2020 compared to 2019, fueled by stronger consumer spending, easing monetary conditions and growing tourism sector,” Sebastian told reporters.
He said consumer spending, which accounts for 66 percent of the country’s GDP, will expand further driven by improved manageable inflation and robust Overseas Filipino Workers (OFW) remittances.
Security Bank chief economist Robert Dan Roces likewise predicted that GDP will settle at 6.5 percent this year.
“By industry, services will come in strong. By expenditure, growth to be driven by strong household consumption on steady inflation and better remittance numbers,” Roces said in a text message.
He said the double-headed stimulus from a timely passage of the 2020 budget and the extended validity of the 2019 version will also contribute to the GDP rebound.
The Philippine Statistics Authority is scheduled to report fourth-quarter and full-year 2019 GDP data on 23 January.
Victor Abola, independent director at FMIC, said they are bullish on prospects this year as they now see that the worst days for inflation are over, which means faster growth in household spending is on the horizon.
Abola, who is also an economics professor at the University of Asia and the Pacific, said the local economy will continue to be resilient amid the lingering global uncertainties.
Despite the ongoing tension between the United States and Iran and the recent eruption of Taal Volcano, Abola said the economy will manage to rebound.
“The Iran-US situation is already 40 years old, I don’t think Iran is in any position to retaliate because for sure they know what the consequences would be. And in the recent eruption of Taal (Volcano), it is very localized. Of course, there will be effects on consumer spending but it is recoverable,” Abola explained.
On the flip side, Abola warned that investors’ sentiments may pull down the economy if not quickly resolved.
“Given the robust outlook, one of the key risks to growth is investors’ sentiment. They may be unhappy now but it will change. For the current year, the investors’ plans are still there. I don’t think they will stop their plans because of negative sentiments,” he said.