The First Metro Investment Corporation (FMIC), the investment banking arm of the Metrobank Group, expects the Philippine economy to recover with a 5-6% growth by the end of this year, reversing the 9.6% contraction in 2020 due to the Covid-19 pandemic.
The firm also sees the faster global economic recovery, accelerated vaccine mobilization, sustained supportive fiscal and monetary policies, and the government’s commitment to push infrastructure projects fueling this year’s growth.
FMIC president Jose Patricio Dumlao said in a virtual press briefing Wednesday the country’s “dependable and resilient OFW remittances, which grew 13% year-on-year in April this year, and the Business Process Outsourcing (BPO) services are anticipated to perform even better. As employment starts to pick-up and more people get inoculated, consumer confidence is also expected to improve,” he added.
Dumlao said the upcoming election next year is also anticipated to support growth. “We see a lot of positive signs and reasons to believe that the country is on its way to recovery but it is not to say that we should let our guards down. Still, the biggest risk to our outlook is the uncertain course of the pandemic. We should continue to be cautious and mindful and do our share in controlling the spread of the virus,” he stressed.
University of Asia and the Pacific (UA&P) economist Dr. Victor Abola said the investment banking arm’s growth forecast for this year slightly follows the government’s growth target range of 6-7%.
Abola said the industry sector, which is expected to rebound to 13.5% this year from last year’s -13.2%, will mainly boost the country’s gross domestic product (GDP).
He also noted the accelerating government construction efforts affirm its determination to make it a “booster for the economy,” he said.
Abola expressed his optimism the economy will register better growth figures starting in the second quarter with the recovery in the manufacturing sector, as well as in exports and capital goods imports
He added the services sector can also likely post a growth of only 3% this tear from its -9.2% last year due to the pandemic.
The FMIC last January made a growth forecast of 5.5 to 6.5% for this year with sustained government spending and the rollout of the Covid-19 vaccinations.
Abola attributed the slight downward revision of this year’s economic growth forecast to the negative growth in the first quarter due to resurgence of Covid-19 cases.
The Philippine economy shrank at a slower pace of 4.2% in the January to March period, but is expected to stage a recovery in the following quarters.