The country’s economic growth is expected to stay above 7 percent for the fourth consecutive quarter as the Philippines outperforms the rest of Asia amid weak economic conditions.
Separate analyst forecasts showed that the economy would grow past the top end of the government’s 6 to 7-percent target for the third quarter of the year. This was after the Philippine economy grew by 7.5 percent in the second quarter and 7.7 percent in the first, making it the fastest-growing market in Southeast Asia.
“Given the backdrop of decelerating inflation and increased government infrastructure spending, we remain optimistic that gross domestic product (GDP) growth in the second half will again exceed the 7-percent target of the government,” First Metro Investment Corp. (FMIC) said in a report this week.
“Continuing low interest environment and better exports prospects provide additional support to this view.”
Supporting the country’s growth was the steady increase in remittances from overseas Filipino workers (OFWs). Domestic consumption, which is supported largely by remittances from migrant workers, accounted for about 70 percent of GDP.
Mirroring FMIC’s sentiment, Britain-based financial giant HSBC said it was “highly possible” that growth in the third quarter would surpass 7 percent.
HSBC sees the Philippine economy growing by 7.1 percent in 2013. Next year, growth is expected to decelerate to 5.4 percent, although HSBC Asian Economic Research head Frederic Neumann said there was a “high upside” for the economy next year.
Neumann said while remittances currently provide the Philippines with enough dollar income to pay for the imported goods and services it needs, “it won’t be there forever.”
Neumann said that, as economic condition continues to improve, more Filipinos will choose to stay in the country instead of seeking jobs abroad. This will mean lower remittances “10 to 15 years from now.” As a result, the Philippines will have to find a new stable and robust source of dollar revenues, he added.
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