MANILA — Officials of Manulife Asset Management are optimistic for a seven percent growth for the Philippine economy this year due in part to the government’s ambitious infrastructure program.
“We think that Philippine GDP (gross domestic product) growth will be close to seven percent. Probably it’s gonna be one of the fastest rates of growth in Asia,” Manulife Asset Management Asia Senior Strategist (Asia) Geoff Lewis said in a briefing Monday.
Manulife’s growth forecast is at the lower end of the government’s seven to eight percent target for 2018-22. Lewis said the company continues to favor the Philippines, Indonesia and Vietnam among Asian countries given their fundamental strength.
Lewis said investors continue to be positive on the domestic economy and this is expected to drive foreign investments into the country.
He said inflation is expected to continue creeping up this year but pointed out that this is not unique to the Philippines but in other countries as well. “It’s a global thing,” he said.
Mark Canizares, Manulife Asset Management and Trust Corporation Vice President and Head of Equities, during the same briefing, said consensus forecast is for inflation to peak this year but to decelerate next year to within the government’s two to four percent target, although he declined to give more specific figures.
He attributed the uptick of inflation rates to higher prices of fuel in the international market, which as of this April has risen to around USD66 per barrel from year-ago’s USD53 per barrel; and the hike of excise taxes on sin products, among other. He added that the current weakness of the Philippine peso is also a contributor to domestic inflation since based on peso terms, fuel prices is up by 33 percent year-on-year while it is 23 percent up in terms of US dollar terms.
“Consensus is that in 2018 it twill be higher but steadily come down in 2018,” he said.
Canizares, on the other hand, said the government’s infrastructure program continues to gain positive assessments from investors due partly to its projected impact on government spending.
“Government has shown that it has been more open to companies proposing new infrastructure projects. They’ve also been able to make sure that yes, it’s good to discuss projects,” he said.
The Manulife Asset Management official said the government has also indicated its openness to the fact that to fund its infrastructure program it has to be open to introducing new taxes as well as tapping new access for debt.
“It seems that it is coming together. Yes, it (infrastructure spending) was lower before but I think like right now, 2018, you are seeing acceleration in everything that is being promised, or that has been in the plans for so long. That, I think, in a way is increasing confidence,” he said.
He said the overall sentiment on the government’s “Build, Build, Build” program and the government’s infrastructure spending “has shifted (to) more positive (level) than before.”
“The actual execution… we have to live room for that. But I think in terms of the general direction and where we are heading in terms of the pace of all of these proposed projects it seems that there has been more traction and that’s what we like in general sense as we expect GDP growth at around severn percent,” he added.