Philippine Economy Seen to Remain Resilient Amid Uncertainties in 2014
Makati—(PHStocks)—First Metro Investment Corp. sees the Philippine economy to remain strong in 2014.
First Metro chairman Francisco Sebastian said, “The year 2013 is a year marked by natural calamities and uncertainties both in the developed and emerging markets, but may also be remembered as a year when the Philippines achieved investment grade status. The country has shown resilience, we are still the best performing economy in ASEAN with a 7.4% GDP growth in the first nine months of 2013. Our fundamentals remain intact and will be able to withstand volatilities in 2014, be it domestic or global.”
In 2014, the country’s GDP is projected at 7-7.5% buoyed by the same growth drivers that continue to fuel the economy plus the robust reconstruction and rehabilitation work in typhoon and earthquake stricken Visayas, which will further spur public and private spending. This positive forecast is despite a possible 2% drop in agricultural output caused by natural calamities in 2013.
Inflation will remain manageable at 3.8-4%. It is likely to continue its upward movement in the early part of the year but is anticipated to decelerate before the year ends.
OFW remittances will grow to 6-7% as overseas Filipinos will send more money to their families here, particularly to those affected by the natural disasters in Central Philippines. Demand for Filipino workers overseas will be sustained which will continue to stimulate and increase domestic consumption.
Further softening of oil price is expected at $95 per barrel from an average of $98.42 in 2013.
The Philippine peso is seen to average at 43-46 to a dollar.
Exports are expected to improve at 6-10% due to US recovery and China’s steady growth. Imports are also projected to recover at 8-12%.
No significant movement is foreseen on interest rates in the early months of 2014 but yields are anticipated to experience upward pressure in the latter part of the year. T-bill rates are projected as follows: 91-day at 1.0%, 5-year at 3.5%, 10-year at 4.25%, 20-year at 5.25% and 25-year at 5.75%.
First Metro president Roberto Juanchito Dispo said, “Despite the country’s strong economic fundamentals, yields will still be subjected to external yield movements, mainly by the US. Supply and demand dynamics will be dictated by foreign flows rather than local liquidity.”
On the first half of the year, the equities market is seen to perform at 6,300-6,500 level and price earnings ratio at 17-18x. Key growth industry drivers are power and utilities, properties, consumers, infrastructure and manufacturing.
For capital raising, Dispo explained that it will be more attractive for private corporations to raise bonds given the new tax regulations. He also said, “There will be a strong demand in power financing and PPP. Pre-financing is also expected as corporations will continue to take advantage of lower rates. Banks are seen to issue Tier 2 to comply with Basel 3 regulations. Equity is also a financing option but will be challenged by valuation.”