Investment firm expresses cautious optimism this year
MANILA – One of the country’s biggest investment banking firms, First Metro Investment Corporation, an integral part of the Metrobank Group, said they are “cautiously optimistic” for the recovery of the country’s economy this year.
In its traditional annual economic and capital markets briefing held Thursday morning, First Metro President Jose Patricio Dumlao said the Philippines experienced one of the worst years last year “and yet we have lived through it.”
The country’s resilience is no surprise because the country and its people survived calamities and crises and emerged victorious.
“Even in the midst of the pandemic, private companies were able to raise an unprecedented amount of US$8 billion in offshore market. Our GIR (dollar reserves) hit an all-time high, supporting the peso. OFW remittances and IT-BPO sector defied bleak expectations,” he said
He explained with the achievements despite the odds, “we expect the Philippine economy to rebound in 2021.”
He said the country’s GDP returned to positive territory and will expand by 5.5-6.5% due to OFW remittances which is anticipated to increase by 4-6% this year as well as government spending which is geared strengthen its program of Reset (health), Rebound (Infra), Recover (skills upgrading), and the market reform initiative es under Bayanihan 2, GUIDE, FIST and CREATE), all expected to strengthen the economy.
He noted other factors to boost growth, including the mild inflation rate of 2.7% and the completion of big-ticket projects including the Metro Manila Subway, North rail. SLEX Extension, NLEZ-East, MRT-7, and Connector-2 which are all expected to ease deplorable traffic conditions in the National Capital Region.
Mr. Dumlao said the expected roll-out of the vaccine and a more focused and localized restriction will improve the country’s economic performance this year.
“After slumping to -11.1% year-to-date November 2020, exports are expected to perform better this year at 15-18%, while imports will be at 20-24% range, compared to its disappointing performance of -24.5% for the same period,” he explained. He added the peso will depreciate slightly because of the stronger demand for imports while the exchange rate will be within the P49-50 to a dollar.
He said the low interest will prevail. He added it will be within what he described as a “tight range” (+/-25 bps) from its current levels and depending on how quickly economic recovery gain momentum and the further accommodative measures form the BSP as “it can still afford further policy rate cuts.”
First Metro sees 2021 as “the strategic time to come to market as the low-rate environment will be maintained, if not, further reduced to spur growth.”
Mr. Dumlao said the interest in offshore bond issuances will be sustained because the rates in global markets remain low and liquid. He added in the equity capital market, more listings, IPOs both in the main board and SME board, REOTs and follow-on offerings, are expected this year as markets stabilize and investor demands grows strong. (Melo M. Acuña)
Mr. Jose Patricio Dumlao, First Metro Investment Corporation President. (Screen grab from Annual Economic and Capital Markets briefing/Melo M. Acuna)