First Metro Investment Corp., the investment banking arm of the Metrobank Group, sees the Philippine economy growing 6 percent to 6.5 percent in 2016, on solid macro-economic fundamentals.
First Metro chairman Francisco Sebastian said in a news briefing in Makati City Wednesday the outlook for the economy remained robust but “guarded” amid uncertainties in the domestic and global markets.
“The country’s GDP is projected to expand by 6 to 6.5 percent underpinned by sound macroeconomic fundamentals, robust domestic consumption, fueled by OFW remittances and the continuously growing business process outsourcing sector,” Sebastian said.
He said other factors that could contribute to a stable economy this year included the stable peso compared to other currencies in the region, moderate inflation and low oil prices.
The industry sector is projected to grow 8.7 percent this year from 5.6 percent last year, while the services sector is seen to expand 7 percent, up from 6.4 percent in 2015.
Sebastian, however, said the threats to a sustained economic expansion would be a slower global economic growth, infrastructure problems and lower foreign direct investments.
“Despite these, we remain optimistic. The country’s GDP growth [6 percent expected in 2015] remains one of the fastest in the Asian region. Our balance of payments position remains strong,” Sebastian said, adding that remittances along with business process outsourcing revenues continued to be growth boosters.
First Metro also said a moderate inflation environment was expected to persist this year as prices of rice and other major food items remained stable along with low fuel prices.
First Metro said it expected inflation rate to average 2.5 percent this year, faster than 1.4 percent recorded in 2015. “This despite the effects of El Nino in agricultural output, which will be cushioned by lower oil prices in the world market and large importation of rice,” it said.
Growth of remittances is expected to slow down to 0 to 2 percent this year from around 4 percent in 2015 as oil-producing countries suffer from budget deficit due to declining oil prices. First Metro said the demand for skilled manpower overseas would remain steady.
GDP grew 5.5 percent in the first nine months, below the government’s earlier target of 7 percent to 8 percent for 2015.
“The Philippine economy will remain robust in 2016 but we must learn from our experience in 2015. We predicted a very strong growth in almost all sectors in 2015 but there were internal and external developments as well as long-standing structural constraints that kept our growth rate closer to the ground,” Sebastian said.
He said global growth continued to be anemic, infrastructure developments coupled with government underspending were disappointing, FDI growth remained the slowest in the Asian region and weaker agricultural output provided the drag as well.