Economy seen growing by 7.5% this year

MANILA, Philippines - First Metro Investment Corp. (FMIC), the investment banking arm of the Metrobank Group, expects the Philippine economy to remain strong this year, growing 7.5 percent from an estimated 7.4 percent in 2013.

During their annual economic briefing, FMIC chairman Francisco Sebastian said the domestic economy will likely remain resilient this year, anchored on strong economic fundamentals.

“Our fundamentals remain intact and will be able to withstand volatilities in 2014, be it domestic or global,” Sebastian said.

He noted that the country had survived the numerous challenges of 2013.

“The year 2013 is a year marked by natural calamities and uncertainties both in the developed and emerging market, but may also be remembered as a year when the Philippines achieved investment grade status. The country has shown resilience, we are still the best performing economy in ASEAN with a 7.4 percent GDP growth in the first nine months of 2013,” he said. 

“In 2014, the country’s GDP is projected at 7-7.5 percent, buoyed by the same growth drivers that continue to fuel the economy plus the robust reconstruction and rehabilitation work in typhoon and earthquake stricken Visayas, which will further spur public and private spending,” he added.

For his part, FMIC president Roberto Juanchito Dispo said their bullish forecast remains despite a possible two percent drop in agricultural output caused by natural calamities in 2013.

Dispo also warned against the existence of risk factors such as electricity rates that would possibly affect growth this year.

He said any delay in reconstruction and rehabilitation in the calamity-stricken areas would also hinder growth.

Other factors that could stall growth are political issues, inflated property assets and external developments.

On the inflation rate, FMIC said it would remain manageable at 3.8 percent to four percent.

“It is likely to continue its upward movement in the early part of the year but is anticipated to decelerate before the year ends,” it said.

OFW remittances will likewise grow six to seven percent as overseas Filipinos send more money to their families, particularly to those affected by the natural disasters.

Demand for Filipino workers overseas will also be sustained, which will continue to stimulate and increase domestic consumption.

In other indicators, FMIC said it expects a further softening of benchmark oil price to $95 per barrel from an average of $98.42 in 2013.

The Philippine peso is seen to average at 43-46 to a dollar.

Exports are expected to expand 6-10 percent due to the US recovery and China’s steady growth. Imports are also projected to recover at 8-12 percent.

Meanwhile, FMIC sees no significant movement in interest rates in the early months of 2014 but yields are anticipated to experience upward pressure in the latter part of the year. Treasury bill rates are projected as follows: 91-day at one percent, five-year at 3.5 percent, 10-year at 4.25 percent, 20-year at 5.25 percent and 25-year at 5.75 percent.