Global financial company Nomura reduced the 2017 growth forecast for the Philippines to 6.1 percent from the previous estimate of 6.3 percent, as the country may be adversely affected by the economic policies of newly-elected US President Donald Trump.
Nomura said in a report over the weekend the Philippines was one of the most highly exposed economies to the US, as its exports to the US represented 15.3 percent of total shippments last year, the highest ratio among Asian countries.
“In addition, if US immigration policies are tightened and outsourcing activities are reduced during Trump’s drive to bring jobs back, this could hurt both the Philippines’ current account surplus and domestic demand via lower overseas worker remittances and lower FX revenues/employment from the BPO sector, which mostly cater to US corporates,” Nomura said.
“On balance, we would put the growth impact at around -0.2pp [percentage point] versus our base case 2017 growth forecast of 6.3 percent,” it said.
Nomura said despite the lower growth projection for next year, the Philippines was expected to continue outperforming other economies in Asia.
The 6.1-percent growth estimate for the Philippines next year is still higher than 6 percent for China, 5.4 percent for Indonesia, 3.6 percent for Malaysia, 0.6 percent for Singapore, 1.5 percent for Korea, 0.8 percent for Taiwan, 2.9 percent for Thailand and 2.2 percent for Australia.
Only India was seen to grow faster than the Philippines at 7.6 percent in 2017.
Nomura said around 30 percent of remittances from overseas Filipino workers came from the US. Remittances and BPO revenues provide steady inflows which boost private consumption. Together, they account for nearly $50 billion worth of inflows every year.
Nomura also said the recent anti-US rhetoric by President Rodrigo Duterte could likely raise the risk of weaker relations with the US, its biggest political ally.
Meanwhile, Moody’s Corp. said gross domestic product growth in the third quarter likely reached 6.9 percent, a tad slower than 7 percent in the second quarter, pulled down mainly by sluggish exports, Moody’s Analytics, a division of Moody’s Corp., said in a report over the weekend.
Moody’s said the deceleration of exports expansion in the July-to-September period was due to lower demand from the global market.
“We look for Philippine GDP growth to come in at 6.9 percent year-on-year for the third quarter, decelerating slightly from the 7-percent result posted in the three months to June,” Moody’s said.
It said the main drivers of the economy would continue to be domestically focused, with private consumption, investment and government spending all expanding rapidly.
“Exports likely slowed in the quarter… partly a result of subdued global demand. In addition, nickel exports will be dented by the temporary closure of several mines due to compliance issues,” Moody’s said.
The government is set to release the GDP data for the third quarter this week.
The economy grew 6.8 percent in the first quarter and 7 percent in the second quarter.
