First Metro Investment Corp., the investment banking arm of the Metrobank Group, said Monday the Philippine economy will continue to grow at a “fast pace” of at least 7 percent this year.
First Metro president Rabboni Francis Arjonillo said in a mid-year economic briefing in Bonifacio Global City the economy was expected to expand between 7 percent and 7.5 percent in 2018, as macroeconomic fundamentals remained solid.
“Robust domestic demand continues to fuel the economy underpinned by double-digit investments growth, strong infrastructure spending, more jobs creation, a resurgence in manufacturing and rising tourist arrivals,“ Arjonillo said.
“We remain optimistic that the Philippine economy will continue to grow at a fast pace and we have every reason to believe this,” he said.
FMIC said domestic demand remained strong with an 8.3-percent growth rate while investments rose at a double-digit pace in 15 of the last 24 quarters.
The bank said foreign direct investments surged 24.3 percent to $3.2 billion in the first four months from $2.6 billion a year ago.
It said the huge acceleration in infrastructure spending through the government’s ‘Build, Build, Build’ program was evident over the last seven months.
“The resurgence in manufacturing has also been very encouraging, growing 19.8 percent in May this year,” FMIC said.
FMIC said strong job growth was expected to continue to rise in step with heightened infrastructure spending and resurgence of the manufacturing sector. Julito G. Rada
International visitor arrivals increased 14.8 percent in the first quarter to 2 million from a year ago.
Remittances are projected to rise 2 percent to 4 percent this year, after growing 4.2 percent in the first five months.
FMIC said while exports showed lackluster performance in the first five months, the synchronized rebound of the economies of the US, EU, China, and Japan would help boost exports in the coming months.
Exports are projected to grow 6 percent to 10 percent this year, it said.
Professor Victor Abola of the University of Asia & the Pacific said higher inflation, increased interest rates and some noise in the political arena could be sources of concern.
Abola said the recent ouster of Supreme Court Chief Justice Maria Lourdes Sereno, the spate of extra-judicial killings, the country’s reliance on China, and the removal of tax incentives under the Tax Reform for Acceleration and Inclusion law could affect the flow of foreign direct investments in the Philippines.
“The possibility of the Fed raising interest rates again also remains a concern,” Abola said.
The Fed already raised interest rates twice this year.
“The peso is likely to trade at an average of 53.90 against the US dollar for the rest of the year,” FMIC said.
Abola said inflation might start to taper off to 4.2 percent to 4.5 percent in the second half of 2018.
Abola said the government’s growth target range of 7 percent to 8 percent could be “doable for 2018 to 2022 with mild inflation.”