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Philippines: HSBC says investments, consumption to drive growth
MANILA, Philippines – British banking giant HSBC said strong investments and private consumption would help sustain the country’s economic expansion.
In a report, HSBC economist Su Sian Lim said the gross domestic product growth in the Philippines, Indonesia, Malaysia, Thailand, Singapore and Vietnam would average 4.4 percent this year and 4.5 percent in 2018.
“ASEAN gross domestic product growth should average 4.4 percent this year, not very different from the past three years. But flat growth does not mean boring growth. The Philippines and Vietnam will top the consumption and investment ranks, while Malaysia and Thailand appear relatively weaker on a number of fronts,” Lim said.
The economy is expected to expand 6.5 percent this year and next year from 6.8 percent last year while inflation is expected to rise to 3.6 percent from 1.8 percent last year.
Lim said consumption in the Philippines is projected to grow by 7.1 percent, slightly slower than the election-driven surge of 7.3 percent last year, due to sustained cash remittances from Filipinos abroad.
Lim said investment growth in the Philippines should remain in double digits at 12.4 percent, the fastest in the Asean region with Malaysia’s 7.5 percent, Indonesia’s 4.2 percent, Malaysia’s 2.7 percent, Thailand’s 1.3 percent and Singapore with a contraction of 0.8 percent.
The Duterte administration is ramping up its budget deficit spending to three percent of GDP this year with infrastructure investment upwards of five percent of GDP, Lim said.
“The Duterte administration plans to continue increasing infrastructure spending to seven percent of GDP by the end of its term – significantly boosting the overall contribution of investment the structure of growth in the Philippines,” she said.
She pointed out fiscal consolidation in recent years would allow the government to pursue fiscal expansion, and low public debt levels suggest this spending is sustainable for now.
The government, Lim explained, is also hoping to accelerate public-private partnership projects to co-opt more financing from the private sector.
HSBC expects the Bangko Sentral ng Pilipinas (BSP) to keep interest rates steady amid the impending rate hikes by the US Federal Reserve this year. “We expect the BSP to keep the policy rate and interest rate corridor on hold throughout 2017,” she said.
Source: http://www.philstar.com/business/2017/02/03/1668415/hsbc-says-investments-consumption-drive-growth