First Metro confident on Philippine economy

The Mindanao Examiner Regional Newspaper - - News - Report from Cablinda.) (With a Malou

FIRST METRO Investment Corporation said it is confident the Philippine economy will maintain its steady growth until the end of the year and that the country is expected to continue its rapid growth.

It said the Philippines’ gross domestic product or GDP is projected to expand at 6.5-7% on grounds of strong economic fundamentals, heightened election-related spending, increased domestic demand that is now investment-led, coupled with steady consumer spending from money poured in by overseas Filipino workers (OFW) and business process outsourcing sector, as well as stronger government spending, and the overall high optimism for the new leadership of President Rodrigo Duterte.

“We remain optimistic on the performance of the Philippine economy for the rest of the year. With the anticipated 6.5-7% GDP growth, the country is expected to continue its rapid growth, outperform its regional peers and weather any further global economic and financial market headwinds. The country’s fiscal position remains healthy and the monetary policy, that is supportive of growth, is seen to persist even after the change in government leadership,” said First Metro president Rabboni Francis Arjonillo in a statement sent to the regional newspaper Mindanao Examiner.

In the same statement, First Metro Investment Corporation, the investment banking arm of the Metrobank Group, said inflation is seen to average around 2-2.2% due to the slight recovery of oil prices and the effects of El Niño. And the growth of OFW remittances will continue to be tempered by the impact of low oil prices, particularly in the Middle East, but will maintain a positive growth of around 2-4%, and that exports are seen to improve marginally at 2-5% but may continue to reel due to weak global economy.

It said imports are expected to grow 7-10% this year driven by robust domestic consumption and investment demand. The peso will be trading between 46.50 and 47.50 against the greenback, slightly stronger than the start of the year projection of 48-49, as a result of robust investment inflows.

Bond yields are also projected to stay at the current levels due to high domestic liquidity. Nonetheless, volatility is expected to persist due to uncertainties brought about by global events (i.e. Brexit, possible China hard landing): 5-year at 2.693.09%, 10-year at 3.13-3.53%, and 25-year at 4.16-4.56%.

It added that infrastructure spending will remain at 4.5-5% on expectation of smooth and faster implementation of PPP projects and other public infrastructure. In equities, the market may challenge its previous all-time high of 8,127 (achieved in April of last year) towards yearend, buoyed by the strong momentum of foreign flows, increased investors’ confidence in the sound fundamentals of the domestic economy and clear political mandate of the Duterte administration. The policy pronouncements of the Duterte administration have been so far market-friendly and ensure policy continuity. That made a whole lot of difference in propelling the equities market post elections, it added.

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