FMIC bets on 7-7.5% GDP growth this year

First Metro Investment Corp. (FMIC) is betting on a seven to 7.5-percent growth rate in the country’s gross domestic product (GDP) this year, its top executive said.

In a press briefing yesterday, FMIC president Roberto Juanchito Dispo said they based the bullish outlook on accelerating government expenditures on infrastructure and rehabilitation projects, a resurgent manufacturing sector, pre-election spending, strong domestic demand, and improving global markets.

Government, meanwhile, forecasts economic growth this year to settle between 7.5 to 8.5 percent.

Dispo said the industry sector will likely expand 11 percent this year from an estimated 7.6 percent in 2014 and 7.1 percent in 2013 while the services sector is expected to grow 7.2 percent in 2015 versus the estimated 5.9 percent last year.

However, Dispo warned of risks coming from the looming power crisis, concerns over US interest rates in the second semester of 2015, excessive drop in global oil prices, and natural disasters.

University of Asia and the Pacific (UAP) chief economist Victor A. Abola supported the bullish economic outlook, stating that domestic consumer spending and government spending would lead growth this year.

Abola said the pace of consumer spending would accelerate to 6.5 percent this year from 5.8 percent in 2014. Studies conducted on profitability of foods and malls show double-digit growth last year. In 2013, consumer spending expanded 5.7 percent.

Government spending is likewise seen to speed up by 6.6 percent in 2015 from 4.8 percent in the second semester of 2014.

Likewise, investment spending is forecast to further expand by 14 percent this year from just nine percent in the second semester of 2014, driven by auto sales, infrastructure, and capital goods imports.

Auto sales will expand 37.7 percent in 2015 from 24.8 percent in the second semester of 2014, and aggressive importations of power plants, telecoms and aircraft expanding from a negative nine percent to a positive five percent.

The construction sector is likewise forecast to grow 16 percent this year, from an average four percent in 2014.

Global oil prices will still remain low, with occasional drops to as low as $50 per barrel. WTI prices are forecast to fall further by 33.1 percent and Brent crude by 31 percent.

Abola said global prices would correct in the first quarter to an average $63 to $65 per barrel this year. It is likewise expected to possible breaches at the $40-to $50 per barrel.

Lower domestic oil prices could result to as much as P220 billion in savings from oil receipts.

However, remittances will slightly move downward to 4.5 percent from six percent, due to declining crude prices in oil-producing OFW destinations.