top of page
  • Writer's pictureMelo Acuna

PH economy recovering from resilience to growth


First Metro: Philippine economy switching from resilience to growth


MANILA – First Metro Investment Corporation, Metrobank group’s investment banking arm said the country’s economy will move from resilience to growth during this year’s last quarter.


First Metro president Jose Patricio Dumlao said despite the recovery signs at the beginning of the year were stemmed due to the COVID-19 surge and eventual lockdown in the National Capital Region and nearby provinces last March, the economy remained resilient.


“The country has maintained its credit ratings and we continue to have a strong and healthy banking system, ample foreign reserves and adequate fiscal stamina. And now, we are seeing our economy switching from resilience to growth,” President Dumlao said.


With the economy’s contraction of 9.6% in 2020, the country’s GDP is expected to growth by 5-6% by year-end.


In a statement, First Metro Investment Corporation said the faster global economic recovery, accelerated vaccine mobilization, sustained supportive fiscal and monetary policies, and the government’s firm resolve to push infrastructure projects that will fuel growth.


“With its high multiplier effect, the infrastructure spending program of the government will be one of the main drivers of growth,” the statement revealed.


Dumlao said the dependable and resilient OFW remittances, which grew 13% year-on-year in April this year as well as BPO services are expected to perform much better.


“As employment starts to pick-up and more people get inoculated, consumer confidence is also expected to improve. The upcoming election next year is likewise anticipated to support growth,” he added.


Inflation is expected to remain elevated at 4.2% despite the fact food prices have adjusted downward. The upward movement is due to the high crude prices and supply chain bottlenecks.


They expect the Philippine peso will depreciate slightly due to stronger demand for imports and projected to trade within P49-50 to a dollar.


The statement revealed the debt market, longer tenors are opening up, which means investors are willing to take on more risks for better returns. With excess liquidity of P2.12 trillion, interest rates should be down but inflationary pressures are putting it up.


Interest rates for the rest of the year are expected to slightly increase from its present levels.


Meanwhile, in the equities market, positive investor sentiment has returned with the success of recent issuances.


“A healthy pipeline of offerings and a new asset class, the REIT, are expected to stir excitement in the investing community. The rise of the retail investors in the local equities market is driving liquidity and moving the market,” the statement added.


Foreign investors are expected to return as favorable market indications come to light, with the Philippine Stock Exchange main market index has the potential to reach the range of 7400-7800 by year-end with price earnings ratio (PE) of 17x. Corporate earnings are projected to deliver 25% growth by end of 2021.


“We are seeing 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. We look at the recent rating outlook downgrade by Fitch Ratings constructively. It is more of a reminder that economic recovery requires hard work rather than a negative warning. It is a useful heads up too about the many pitfalls that line up the path to growth and the myriad of the country’s existing economic strengths to overcome these,” Mr. Dumlao concluded. (Melo M. Acuña)







7 views0 comments
bottom of page