HSBC, DBS see robust, but slower GDP growth for Phl

MANILA, Philippines - Investment banks HSBC and DBS Bank Ltd. see the Philippines booking slower, but still robust economic expansion this year amid external shocks arising from the normalization of interest rates in the US.

In the bank’s latest economic data report, HSBC economist Joseph Incalcaterra said the Philippines is set to book a slower gross domestic product (GDP) growth of 6.5 percent this year from the revised 6.9 percent last year.

Latest data released by the government showed exports growth eased to 11 percent in February from the revised figure of 24 percent in January, while imports grew 20.3 percent after contracting by 16.2 percent in the first month of the year.

“Although trade makes up a relatively small share of GDP in the Philippines compared to the ASEAN average, recent data helps shed light on the broader economic story,” Incalcaterra said.

Overall, trade data suggests the Philippines would continue to see further deterioration in the trade balance this year, he noted.

Incalcaterra said the Philippines has raised its budget deficit ceiling to three percent instead of two percent of GDP as it allocated 5.2 percent of GDP for infrastructure spending.

Unfortunately, the government got off to a slow start in meeting its expenditure target this year.

The economist said the country’s current account balance is seen reversing into a deficit of 0.3 percent of GDP this year after deteriorating sharply to a surplus of 0.2 percent last year from 2.5 percent in 2015.

Incalcaterra said remittances from overseas Filipinos as well as stable oil prices in the world market would continue to provide much-needed support to the country’s balance of payments position.

He added foreign direct investments (FDI) inflows would continue this year.

On the other hand, DBS said the country’s GDP growth is seen easing to 6.4 percent this year before picking up to 6.7 percent next year.

The investment bank said the import growth of the Philippines is seen slowing to 10 percent this year from 13.7 percent in 2016.