MANILA-- Ayala-led Bank of the Philippine Islands (BPI) continues to see a robust growth for the Philippine economy despite a bleak export, with the last quarter output for 2016 projected at 6.6 percent.
The bank's latest forecast is lower than the 7.1 percent output, as measured by gross domestic product (GDP), in the third quarter of last year but within the government's six to seven percent target for 2016.
In a research note, the bank attributed its projection to strong domestic consumption, which accounts for 65 percent of overall growth.
"Although the trade gap continues to widen topose a viable drain on the overall growth number, the consumption momentum appears potent enough to compensate," it said.
The study also considers as additional boost to the GDP the improvement of government spending and capital formation.
"On top of the traditional growth drivers, we've seen President (Rodrigo Roa) Duterte indeed hit the ground running on the expenditure side, up 12 percent for the period October-November, while investments are expected to sustain their torrid expansion with importation of capital goods still posting double digit growth," it said.
"The end result will be the Philippines retaining pole position in the ASEAN region in 4Q although whether or not we sustain this pace may rely on our ability to balance our external position and fiscal position in the medium-term," it noted.
The research note also cited that because the Philippine economy relies mainly on domestic factors to drive growth, any impact from the "American first" policy of US president Donald Trump will be limited.
It explained that although the US is the Philippines' second largest trading partner, "the full effect of Trump may be felt more so if the US looks to stifle its trade relations with China."
"The Philippines is part of the global supply chain, with China its main trading partner and any tariff slapped by the US on China will undoubtedly cause the entire gravy train to slow, the Philippines included," it said.
"It's a good thing that the Philippines relies less so on trade and more so on our domestic consumption momentum," it added. (PNA)
Source: Philippines News Agency