First Metro Investment Corp., the investment banking arm of the Metrobank Group, expects the Philippine economy to grow as high as 6.6 percent in 2020, driven by robust consumer spending and higher public expenditures on infrastructure projects.
First Metro president Rabboni Francis Arjonillo said the economy would likely grow between 6.2 percent and 6.6 percent this year despite the Taal Volcano eruption.
“The Philippine economy will grow faster in 2020 compared to 2019, fueled by stronger consumer spending, easing monetary conditions and growing tourism sector,” Arjonillo said during the bank’s annual economic briefing in Taguig City Tuesday.
“Consumer spending, which accounts for 66 percent of the country’s GDP, will expand further driven by robust government and infrastructure spending, higher employment rate, manageable inflation and robust OFW remittances,” he said.
Arjonillo cited the latest Tourism Department data showing that in the first 10 months of 2019, visitor arrivals grew 15 percent to 6.8 million from 5.9 million in the same period a year ago.
The top visitors were Koreans and Chinese, accounting for 23 percent and 22 percent, respectively, of the total arrivals. Arjonillo the growth momentum was expected to be sustained this year.
Remittances, which expanded by 4.6 percent to $24.8 billion in 2018, is expected to remain resilient this year, he said.
Meanwhile, inflation is seen to stay low between 2.5 percent and 2.8 percent in 2020 after settling at a manageable level of 2.5 percent in 2019.
Arjonillo also downplayed any significant impact to the economic growth of the Taal Volcano eruption, saying the natural disaster “is localized.”
The University of Asia & the Pacific economist Victor Abola said the immediate impact of the eruption would be on consumption spending because of the displaced individuals. He said the domestic economy would remain resilient to weather the natural occurrence.
Data showed that the Region 4-A composed of the provinces of Cavite, Laguna, Batangas, Rizal, and Quezon (Calabarzon) accounted for 17 percent of the country’s GDP in 2018.
The NCR, meanwhile, retained a share of 36 percent to total output. Central Luzon, on the other hand, accounted for 9 percent.
Abola said this decade would be a decade of Filipino consumers. “Consumption held us steady last year. The future for consumption is great in this decade,” Abola said.
He said other factors that would help speed up economic growth in 2020 would be the low inflation rates, low-interest rates, low unemployment rate and low poverty rate. “2020 means a clear vision if we refer to optometrists,” Abola said.
Abola, however, said the biggest risk to growth this year would be investor sentiment’s impact to financial markets.
“For 2020, the plans are there but I don’t think people will shelve their plans just because of some events,” Abola said. Arjonillo, for his part, said inflation remained one of the risks to growth, saying “this could derail the country’s further expansion.”
Economic growth averaged 5.5 percent in the first half of 2019, slower than the target range of 6 percent to 6.5 percent, weighed down mainly by the delay in the approval of the P3.7-trillion national budget for the year.