PHL economy may expand 5-6% this year, says BDO

The Philippine economy will expand this year but at a rate slower than what the government expected, Banco de Oro Unibank Inc. (BDO) said Monday. BDO said in a statement that the domestic economy will grow by 5-6 percent, lower than the government's projection of 7-8 percent. The Sy-led bank pointed out that the economic growth last year would be a tough act to follow despite the renewed confidence generated by the Aquino administration among market participants. The country posted gross domestic product (GDP) growth of 7.3 percent in the first quarter, 7.9 percent in second quarter, and 6.5 percent in the third quarter. From January to September, economic growth averaged 7.2 percent or above the full-year 2010 target of 5-6 percent set by the interagency Development Budget Coordination Committee. Growth momentum Private consumption activities along with higher government consumption due to the public-private partnership initiative will sustain the growth momentum, BDO said. Money sent home by overseas Filipinos workers (OFWs) will fuel consumer activities, the bank said. "Consumption spending remains the country's major growth driver." "Private sector investments are seen contributing to growth this year on the back of continued business confidence and increased interest or participation in infrastructure projects," BDO added. Consumer lending to grow As for banking activities, BDO said this year would be a "challenging year for the industry as the trading gains in 2010 will be hard to match." "Lending is expected to continue to grow this year... as interest rates remain low, business outlook is upbeat, and optimism is high," BDO said. For institutional lending, opportunities are seen in power, utilities, and infrastructure, according to the bank. "Consumer lending is expected to continue growing due to strong consumer confidence, vibrant consumer demand, current low penetration rates, higher per capita income and borrowing capacity, and more affordable or flexible loan terms," BDO said. — JE, GMANews.TV