(The Philippine Star) | Updated March 10, 2013 - 12:00am
MANILA, Philippines - Southeast Asian economies are likely to post divergent growth rates anew this year, with the fast-growing countries expected to expand faster than export-driven nations, a global investment bank said.
China, the Philippines, Indonesia and India grew the fastest in the region in 2012, while the “more open economies” of Singapore, Hong Kong, Taiwan and South Korea expanded much slower, Bank of America-Merrill Lynch (BofA-ML) said.
“For 2013, we expect this pattern to continue,” it said in its report titled “Economic Pulse of Emerging Market Asia.”
As a group, emerging Asia could grow 6.6 percent this year, faster than the 6.2 percent forecast last year. By 2014, growth could come in at 6.8 percent, added.
The Philippines alone is seen to grow six percent and 5.9 percent this year and next after an above-target 6.6 percent last year. The forecasts fell below government targets for both years.
For the region, the export industry is expected to recover with “all the countries achieving positive growth.” Exports have been hurt by falling demand overseas, particularly in debt-ridden developed nations.
Credit will also remain available, the bank said, noting that economies with fast liquidity growth last year were the ones with higher economic expansion.
This, in turn, was supported by central banks’ accommodative position. BofA-ML expects monetary officials to keep interest rates low throughout the year despite “slightly higher” inflation.
Consumer prices may rise by an average of 3.8 percent from 3.4 percent last year. Next year, it may inch up further to 3.9 percent. For the Philippines, inflation is seen to settle between 3.4 percent and 3.7 percent.
Those outlooks are faster than last year’s 3.2 percent. As of February, inflation hit 3.4 percent, still at the low end of the official three-to five-percent target for the year.
The Bangko Sentral ng Pilipinas, while seen to keep key rates steady on its policy meeting on Thursday, would likely raise them by 25 basis points later this year to 3.75 percent and 5.75 percent.
This could provide better yields to investors seeking refuge from Japan’s continued monetary easing, BofA-ML said, forecasting the value of the peso to strengthen to 37 to a dollar this year. For 2014, it could slightly weaken to the 39-level.
“For this year, we remain constructive on Asia foreign exchange. We expect all the currencies to appreciate against the US dollar,” the bank said.
“The pace of appreciation (especially against the backdrop of yen’s weakness) and the potential speculative capital inflows could be the focus of Asian policymakers,” it explained.
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