Philippine economy to remain ‘best performer’ in Asia, says HSBC

Amid forecast slowdown in succeeding quarters 

MANILA, Philippines - Hong Kong and Shanghai Banking Corp. (HSBC) expects the Philippines to post a slower growth in the coming quarters.

“While the pace of growth will likely slow in the coming quarters after the election boost subsides and the base effect turns less supportive, the Philippine economy should nonetheless remain a regional outperformer given the domestically-driven nature of growth,” HSBC economist Joseph Incalcaterra said.

HSBC sees the economy expanding 5.9 percent this year before slowing down to 5.8 percent next year.

The country’s GDP growth accelerated to 6.9 percent in the first quarter from the revised 6.5 percent in the fourth quarter due to election-related spending.

Incalcaterra said the growth was primarily driven by investment and private consumption on the back of sustained government infrastructure spending, election campaign activity, and strong remittances growth.

Economic managers penciled a GDP growth of between 6.8 and 7.8 percent this year.

The country’s GDP growth this year would be faster than Indonesia’s 4.9 percent, Malaysia’s four percent, Thailand’s three percent, Singapore’s 1.6 percent, and Taiwan’s 1.4 percent.

HSBC noted the plan of the incoming Duterte administration to raise the budget deficit target to three percent of GDP instead of two percent under the outgoing Aquino administration to raise infrastructure spending.

Incoming finance secretary Carlos Dominguez said the new administration would follow the trajectory of higher infrastructure spending of at least five percent of GDP.

Incalcaterra added that President elect Rodrigo Duterte has already filled up almost all cabinet positions and is ready to hit the ground running after taking his oath on June 30.

 “We are particularly encouraged by the strong pedigree of the incoming economic team, which includes leaders from the business community, academics with past policy experience,” he said.