DBS forecasts 6.1% GDP growth for Phl

DESPITE CONTINUED DROP IN EXPORTS

Singapore- based DBS Bank Ltd. remains bullish about the economic growth prospects of the Philippines despite the continued decline in the country’s merchandise exports.

Latest data released by the Philippine Statistics Authority ( PSA) showed merchandise exports fell for the 11th consecutive month to $4.3 billion in February on lower earnings across five major export commodities including apparel and clothing accessories, chemicals, other manufactures, metal components, and coconut oil.

“Exports may have taken a tumble, but robust private consumption and investment growth provide enough reasons to stay optimistic on the Philippines’ GDP growth outlook,” the investment bank said.

DBS sees the country’s GDP expanding 6.1 percent this year and 6.2 percent next year. This will be faster than Indonesia’s 5.2 percent, Malaysia’s 4.5 percent, Thailand’s 3.4 percent, and Singapore’s 1.5 percent.

However, it said the decline in exports last February was of little concern.

“Firstly, domestic demand has contributed to the bulk of GDP growth in recent years. As long as both private consumption and investment growth remain strong, there are enough reasons to stay optimistic on the GDP growth outlook,” the bank added.

Despite the negative overall export growth, the bank cited the 8.1 percent rise in exports of electronics as the manufacturing sector has emerged as a key structural driver of the economy.

DBS also cited the strong inflows from cash remittances from Filipinos abroad.

The Bangko Sentral ng Pilipinas reported that money sent home by overseas Filipinos grew 9.1 percent to $2.11 billion in February, or $175 million higher than the same month a year ago. This was the fastest since June when cash remittances booked a double-digit growth of 10.9 percent.

“This is about three times as much as the monthly average trade deficit in 2015. And on an annual basis, total remittances are equivalent to about 40 percent of annual exports. Unless we see imports grow by 30 percent in a year, the current account surplus is likely to persist,” DBS said.

Remittances rose 6.2 percent to $4.13 billion in the first two months of the year. This was faster than the four percent full year growth set by the central bank.

Last year, cash remittances increased 4.6 percent to $25.77 billion amid the strong demand for skilled Filipino workers abroad.