MANILA, Philippines – American financial giant Citigroup said stronger global economic growth would likely translate to a faster gross domestic product (GDP) expansion for the Philippines this year and next.
In its latest Global Economic Outlook and Strategy report, Citi said the country’s GDP would grow 4.2 percent this year and 4.5 percent in 2013.
Weak global demand and cautious spending by the National Government pulled down the country’s GDP growth to 3.7 percent last year from 7.6 percent in 2010. This was lower than the revised growth target of between 4.5 percent and 5.5 percent set by the Development Budget Coordination Committee (DBCC).
The Cabinet-level body forecasts this year’s GDP growing at a faster pace of five percent to six percent.
Citi upgraded its global economic growth outlook to 2.5 percent instead of 2.4 percent this year but retained the GDP growth forecast at three percent next year and 3.5 percent in 2014.
The banking giant said the upgrades are widely spread among industrial countries as it raised its industrial country growth forecast by 0.1 percent for each year from 2012 to 2014.
However, it retained its GDP growth forecast for emerging market economies at 5.3 percent.
“This is the second month in a row that we have slightly raised our global forecasts, after a series of downgrades between April and November 2011,” Citi said in the 84-page report.
Citi said it sees average inflation in the Philippines easing to 3.5 percent this year before rising to four percent next year from 4.8 percent last year.
Inflation in the country eased to a 29-month low of 2.7 percent in February from four percent in January, bringing the average inflation to 3.3 percent in the first two months of the year.
The Bangko Sentral ng Pilipinas (BSP) has set an inflation target of between three percent and five percent this year until 2014.
The BSP’s Monetary Board has slashed interest rates by 50 basis points so far this year as part of its accommodative policy stance to boost the country’s slackening domestic economy.
The BSP reduced interest rates by 25 basis points last Jan. 19 and by another 25 basis points last March 1, bringing the overnight borrowing rate back to a record low of four percent and the overnight lending rate to six percent.
==============================================================================
By: Lawrence Agcaoili
Source: The Philippine Star, March 25, 2012
To view the original article, click here.
Subscribe to the Arangkada NewsRoom via RSS
Subscribe to the Arangkada NewsClips
Comment here