Subscribe to RSSMastercard Forecasts 5% Expansion this Year
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In perhaps the most bullish projection on the Philippine economy by far, MasterCard Worldwide forecasts it will expand by 5 percent this year, driven by strong remittance flows which it expects to grow by 9 percent.
Although other regional and local economists also see growth for the country this year, their projections are much lower, averaging at between 3 percent and 4 percent.
The government targets a gross domestic product growth of between 2.6 percent and 3.6 percent after the economy escaped a recession last year with a 0.9 percent growth.
Dr. Yuwa Hedrick-Wong, economic advisor for Asia-Pacific MasterCard Worldwide, said Asia will lead global economic growth this year.
Wong said remittances are expected to roughly contribute between 1.8 percent and 2.5 percent to GNP growth.
Election spending in 2010 will added another 1.5 percent to 2 percent to growth, he said.
But Wong warned that the Philippines should attract more investments in the next 10 years if it wants to continue experiencing growth.
“Investments are key determining factor for emerging markets. Unfortunately, compared to other Asian countries, the Philippines is getting less,” Wong said.
In 1995, Wong said investment flows to the Philippines accounted for 25 percent of GDP. In 2009, this went down to 12 percent.
“Investments are (actually) going down. That needs to be resolved,” Wong said.
“Investments should come from everywhere. Investments will create more investments,” he added.
He said the problem lies on where investments should go.
“Where should it go? (It should be focused) on the rural or agriculture sector. 70 percent of the economy is in the agricultural sector,” Wong said.
Cumulative remittances of overseas Filipinos (OF) coursed through banks were stronger-than-expected in 2009, even exceeding government forecasts by almost 2 percent.
The Bangko Sentral ng Pilipinas said that money sent home by OFWs grew by 5.6 percent to $17.3 billion, higher than BSP’s forecast of $17.1 billion remittance flows or a 4 percent growth for the year.
Foreign direct investments posted net inflows again in November last year, with year to-date level still above the billion-dollar mark.
FDIs, or foreign investments in fixed assets such as factories and equipment, in November 2009 yielded a net inflow of $82 million, higher than the $59 million net inflows posted in the previous month.
The country’s FDI went down by almost 50 percent in 2008 on massive risk aversion brought by the prevailing global economic slowdown.
For this year, the BSP sees FDIs posting $1.8 billion in net inflows, $300 million higher than its 2009 forecast of $1.5 billion.
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