MANILA – HSBC on Tuesday said the resilience of remittances would
enable the Philippine economy to grow within the government target of
5-6 percent this year.
“The acceleration of remittances is much stronger than expected,
underpinning robust demand for Filipino workers as well the resilient
nature of OFWs and their professions,” said economist Trinh Nguyen in
HSBC’s latest research note issued a day after the release of official August remittance figures.
The Bangko Sentral ng Pilipinas last Monday reported that money sent
home by overseas Filipino workers in August had risen by 8 percent
year-on-year to $2 billion, with the eight-month tally growing 6 percent
to $13.7 billion.
“This pickup stands in stark contrast to August's export contraction
of 9 percent year-on-year,” Nguyen said, pointing out that exports
contribute 21 percent to Philippine gross domestic product as against
the 9 percent for remittances.
“The statistics underscore Philippines becoming an even more service-based economy supported by private consumption,” she said.
In the first half of this year, consumer spending grew 5.4 percent on the back of a 5.1 percent increase in remittances.
“The recent acceleration of remittances points to robust 3Q private
consumption growth. At the same time, fiscal spending is also supporting
public spending and investment. Growth, therefore, is expected to reach
the government's 5-6 percent target,” Nguyen said.
HSBC forecast Philippine GDP expansion of 5.7 percent, which is well
within the government target. In the first six months of this year, growth settled at 6.1 percent, or at the top end of the full-year goal.
The bank expects no pickup in inflation until the first quarter of
next year, when “an unfavorable base effect and an anticipated recovery
from China” will kick in.
Consumer price increases averaged 3.2 percent in the first nine
months of the year, or near the low end of the BSP’s full-year target
range of 3-5 percent.
“As such, we expect the BSP to continue to support domestic spending
by keeping rates at a historic low while remaining vigilant on
inflation,” Nguyen said.
“With global demand weak and inflation expected to be on target for
the rest of 2012, the BSP has room to hold rates low at 3.75 percent to
further spur spending at its next meeting,” she said.
The BSP’s policy-making Monetary Board has two more rate-setting meetings left for this year.
Other market observers, such as DBS, expect the BSP to deliver another 25 basis points reduction in policy rates before the year ends.
The BSP has cut policy rates
by a combined 75 basis points so far this year, sending the overnight
borrowing and lending rates to record lows of 3.75 and 5.75 percent,
respectively.
source: interaksyon.com
