MANILA, July 5 -- First Metro Investment Corp.(FMIC), the investment banking arm of the Metrobank Group, expects the Philippine economy to grow 6.5 to 7 percent this year on the back of sustained robust domestic demand and investments.
“We see that that the domestic demand has been robust. Investment growth has been double-digit despite the slowdown in the first quarter,” said Victor Abola, economist at the University of Asia and the Pacific (UA&P), during the FMIC economic briefing.
Abola said they were also banking on strong capital goods imports and heavy infrastructure spending with the Duterte administration’s “build, build, build” program.
He considered investments in infrastructure a driver of growth in the government side.
The economist thus underscored the need to implement the right-of-way (ROW) law, as he identified ROW as the major obstacle to infrastructure development.
FMIC said the country’s economy would remain strong and also underpinned by steady increase in foreign direct investments, resurgence of manufacturing, the steady expansion of overseas Filipino workers remittances, business process outsourcing (BPO) sector and tourism.
FMIC president Rabboni Francis Arjonillo said the economy was expected to grow at a slower pace should government spending failed to accelerate before the end of the year.
“However, if the Build Build Build campaign of the Duterte administration, which is expected to increase the productive capacity of the economy, create jobs and strengthen the investment climate would move at a faster pace, we would still be able to reach the earlier forecast of above 7 percent growth,” he said.
Arjonillo added the implementation of the Comprehensive Tax Reform Program (CTRP) would also “give the economy a push.”
For his part, FMIC chairman Francisco Sebastian said infrastructure created capacity, particularly in tourism and agriculture sectors.
“Even agriculture is all about infrastructure. How do you improve agriculture? By (building) infrastructure, dams, water, also farm to market roads,” he added.
The country’s gross domestic product (GDP) expanded 6.4 percent in the first quarter of 2017.
Meanwhile, FMIC maintains its inflation forecast of 2.8 to 3.2 percent. Food prices will continue to be stable and oil prices remain low due to increased crude oil production and higher US shale oil output.
It also maintains peso-dollar forecast at an average of PHP51 against the dollar. The Philippine peso will remain under pressure as the United States (US) economy continues to gain traction, leading to the strengthening of the US dollar. (LDV/PNA)