By Michelle V. Remo in Manila/Philippine Daily Inquirer | Asia News Network – Tue, May 21, 2013
Manila (Philippine Daily Inquirer/ANN) - Barclays has raised its 2013 growth forecast for the Philippines as it expects the economy to post one of the fastest growth rates among emerging markets in Asia.
In one of its latest reports, Barclays said the Philippines was now seen to grow by 6.2 per cent this year and 6.3 per cent in 2014.
The international financial services firm earlier projected that the Philippine economy would grow by 5.9 per cent this year.
Its new 2013 forecast for the Philippines is now within the government's official growth target of between 6 and 7 per cent.
Barclays said the Philippines would likely post the third-fastest growth rate among emerging economies in Asia, behind China and Indonesia.
It expects China to grow by 7.9 per cent this year and 8.1 per cent next year. Indonesia, on the other hand, is seen expanding by 6.3 and 6.4 per cent in the same years.
The upgraded growth forecast for the Philippines came amid improved business sentiment on the Philippines following the country's attainment of investment grades this year.
On March 27, Fitch Ratings gave the Philippines its first investment grade from an international credit-rating agency, by lifting its score for the country by a notch from BB+ to BBB-, which is the minimum investment grade.
Standard & Poor's followed on May 2, giving the country its second investment grade from an international credit watchdog.
The two credit-rating firms cited improvements in the country's macroeconomic fundamentals for their decisions.
These fundamentals include the declining outstanding debt of the government in proportion to the country's gross domestic product, the buildup in foreign-exchange reserves, robust economic growth rate, benign inflation and a stable banking sector.
Meantime, Barclays said some central banks in emerging markets in Asia may be poised to ease their monetary policies within the short term to ensure their economies maintain a robust pace of growth despite problems confronting industrialised countries.
"Admittedly, not all emerging economies have slowed but the general climate has engendered some further easing [of monetary policy]," Barclays said.
Its statement is consistent with prevailing views that the Bangko Sentral ng Pilipinas may further cut the interest rate on special deposit accounts, even as it now stands at a record low of 2 per cent.
Barclays said that despite favourable economic performance of the emerging markets, measures to counter the drag caused by the lacklustre demand for imports by industrialised countries were necessary.
"While stronger nominal GDP (gross domestic product) expansion should help to allay deflationary concerns, it is vital that countries seek additional ways to deliver faster real demand expansion," Barclays said.
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