Philippine economy to grow 5% in 3rd quarter

The Philippine economy is expected to grow by 5 percent in the third quarter of the 2011, fuelled by the sustained growth in the industrial sector, government spending and remittances from overseas Filipino workers (OFWs).
FMIC and UA&P Capital Markets Research noted that with more favourable developments for the rest of 2011, the strong growth in China and the US and the easing euro-zone crisis has also contributed to the GDP growth.
“Given the stable inflation rate and the external positive developments, the monetary board would no longer in­crease the key policy rates and reserve requirement for the rest of 2011. It may even favor easing in the wake of an expected weaker global economy,” says FMIC-UA&P.
Exports would likely turn positive again in the fourth quarter, while OFW remittances will continue its robust growth for the rest of 2011 and eventually reach a yearly average of 6 to 8 percent.
FMIC-UA&P expects the foreign exchange rates would have a firmer bias again starting in November due to dollar remittanc­es and portfolio investment flows into the country.
“We see long-term rates sustaining their downward trend, ranging within 5.5 to 6% yield. The latest fiscal stimulus package announced by the government seems to contain only minimal new spending apart from what is already in the budget. As such, we do not see it push yields higher nor threaten the benign inflationary environment.”
In the near term, FMIC-UA&P forecasts the local equities would continue to be driven by risk events from the US and the euro-zone.
“Local earnings season kick-off may lead the market higher. We think a short-term rally can occur although we continue to guard against complacency.”