PHL economy to grow on remittances, corporate earnings

A New York-based think tank said Monday the Philippine economy may grow from 5 percent to 5.5 percent on three fronts but largely on dollar remittances from overseas Filipino workers. The Philippine economy will largely grow based on OFW remittances, corporate earnings, and confidence in the Aquino administration, said Global Source in a report. According to the report, co-authored by former Finance Undersecretary Romeo Bernardo, the low interest rate regime in the country remains conducive to growth as it emboldens bank lending that spurs economic activities. The yield on Philippine Treasury bills and bonds have been on a free fall over the last month on the heels of a credit rating upgrade from Standard & Poor’s (S&P) Rating Services. S&P raised to BB from BB- its rating for the Philippines’ foreign currency sovereign debts that denotes a stable outlook. The May 10 elections, wherein President Benigno Aquino III was elected, improved political stability in the Philippines, S&P also said. While growth may have started to slow down as the fiscal stimulus from government slowly fades, the economy will remain strong for the rest of 2010, the think tank said. “Growth may already have begun to moderate, with seasonally-adjusted output shrinking by 0.5 percent during the third quarter from growth of 1.4 percent previously," according to Global Source. “This has been a regional trend where other Asian economies have similarly lost momentum," Global Source said. The slower economic pace for 2011 should come about in the absence of one-time drivers such as the election-related spending this year. Still, Global Source said it continues to see the Philippine gross domestic product (GDP) expanding by 6.5 percent to 7 percent this year, given the positive 6.5 percent the GDP registered in the third quarter and the 7.5 percent cumulative in the first three quarters. Private sector consumption contributed steadily to growth that helped offset the pullback in government spending, the think-tank added. — VS/OMG, GMANews.TV