MANILA, Philippines – Nomura Securities Co. Ltd has upgraded the economic growth forecast for the Philippines over the next two years. This upgrade is on the back of the strong recovery in the merchandise export of the country.
Euben Paracuelles, an economist at Nomura, said that in the report entitled “Philippines Catching up,” the country’s GDP has been taken upward with 6.7 percent as compared to 6.3 percent last year, and 6.8 percent as compared to 6.5 percent for the year 2018.
This significant growth is faster than other Asian peers such as Indonesia (5.6 percent), Malaysia (4.8 percent), Thailand (3.4 percent), and Singapore (2.5 percent).
He stated that the higher GDP this year is affected by the improvements in electronic exports in the first quarter of the year.
He explained that the electronic exports are the ones catching up in the regional up cycle, which is related to the high domestic demand.
The export growth for electronics jumped up to 10.4 percent year-on-year after a decline of 1.9 percent decline in the last quarter of 2016 vs 4Q2015.
It was in February when the electronics shipments jumped to 15.9 percent. The increase was mainly due to the surge of export volumes while price effects are restrained in other members of ASEAN.
By country, the demand for Philippine exports seemed to pick up from all of its principal trading partners this year, except Japan.
On the other hand, Paracuelles warned that the reversal of the current semiconductor-led rebound in the tech cycle could make a drag on headline export rise because electronics is accounted for the 50 percent of the total merchandise exports.
He also pointed that the protectionist policies of Trump administration can affect the exports of machinery, electronics, and equipment together with the BPO industry.
However, he said that the good part here is that the Philippines is relatively protected from risks of slowdown because it is accounted for in the 26.5 percent of GDP in exports of goods and services. Plus, the domestic demand remains stronger than ever.
He also added that even though they have forecasted a moderation of the tech cycle in the second quarter of this year with a sharper downturn next year, they believe that the economy will remain resilient as the central powers of growth – investment spending and private consumption – continue to prosper.
On the government’s side, Duterte’s economic managers have recorded a GDP growth between 6.5 and 7.5 for 2017 versus last year’s 6.9 percent because of higher investments and stronger domestic demands.
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