HSBC sees PHL ‘robust’ growth

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Category: Top News

Published on Tuesday, 22 January 2013 21:48

Written by Miguel R. Camus | Reporter

HSBC Corp. (HSBC) sees the Philippine economy posting “robust” growth this year, but notes that more needs to be done by the Aquino administration in stemming effects of capital inflows on the peso and boosting investment growth. 

In a January 22 research report, HSBC economist Trinh Nguyen said Philippine gross domestic product (GDP) is expected to grow by 4.9 percent in 2013, slower than the expected 6.2 percent in 2012. She added that rates would likely stay low at 3.5 percent this year, assuming inflation remains tame. 

Nguyen echoed earlier concerns expressed by Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. on challenges posed by the strengthening of the peso against the US dollar. The strong peso has been blamed for hurting the country’s export and business-process outsourcing (BPO) sectors and devaluing money sent home by Filipino workers abroad. 

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The HSBC economist said “policy fiddling” is in the cards, but not the BSP resorting to drastic measures such as turning to monetary policy to stem inflows. 

“Thus, the job to resolve the [peso] problem will ultimately fall on the Aquino administration, as an economic structural issue. A significant investment boost would shrink the current account surplus, and provide much-needed infrastructure improvements to support sustainable growth,” Nguyen said in the report. 

“The BSP has already pulled its weight by stabilizing the macro environment. It’s time for politicians to roll out other policies to improve the business environment and support investment,” she added. 

Nguyen called for further reforms, citing weak investment growth and slow pace of the administration’s
Public-Private Partnership Program as the main issues that need the most attention.

“While the government made good progress on improving the country’s fiscal position, not enough was done to improve the overall business environment, something that contributed to the Philippines’s two-notch decline in the 2013 World Bank Doing Business ranking,” she said in the HSBC report. 

The BSP Monetary Board is holding its monthly policy meeting on Wednesday. Nguyen said she expects no policy change, meaning rates are likely to remain the same.