GOOD NEWS: Philippines Tagged As Asia's Rising Star By A Japanese Financial Company

Another good news has come our way today. A research study by a Japanese financial company named Nomura tagged the Philippines along with India and Indonesia as Asia's "new rising stars" as these countries are seen to boost the region's potential growth by about 8% in 2018.

Gross domestic product (GPD) measurement of the Philippines is projected to grow by 6.9% next year compared to 6.7% this year.

Nomura mentioned that it expects the domestic economy to expand in 2019 by 7.1%.

6.5%-7.5% is the government's target GDP of the Philippines that was projected by economic managers, while the amount significantly rose at 7-8% for the years 2018-2022.

“The economy has sound fundamentals, a healthy fiscal position and is one of the few in Asia that is underleveraged. Domestic demand growth has consistently been the strongest in Asia, and the biggest challenge ahead will be to avoid overheating,”

The research forecasts the Bangko Sentral ng Pilipinas (BSP) to increase key rates by a total of 100 basis points next year as it projects inflation to go beyond the government’s two to four percent target until 2019. 

These hikes are expected to be implemented on every quarter or at a 25 basis point each.

Upside risk on inflation is seen to come from supply-side factors “but we think it will be difficult for BSP to look through these risks amid growth persisting above potential and rising overhearing concerns.”

“As a result, we see relatively agressive monetary policy tightening as necesary,”

The study explained that the same expectation is given to the Philippines as that of Korea and Hong Kong. It expects fiscal policy in the Philippines and Indonesia to help lift growth “not just in terms of running higher fiscal deficits but also improving the quality of spending, with a clear prioritisation on infrastructure implementation.”

It explained that the title “new rising stars” given to India, Indonesia, and the Philippines was given “because they still have enormous growth potential to unlock” given the young demographics, lower rates of urbanization, and reforms on supply-side issues.

It said that the three countries “have kept prudent monetary policy and implemented major tax reforms to increase fiscal space for infrastructure spending.”

These three countries, it said, “are replacing Northeast Asia’s ageing and debt-burdened tigers as the core of Asia’s economic dynamism.”

“They are rapidly moving up the World Bank’s “ease of doing business” world rankings, and winning sovereign credit rating upgrades,” 

“Putting all these pieces together, we believe that a domestic investment boom is in the making for Asia’s cubs, and like the Asian tigers before them, it could do wonders in lifting productivity and potential growth rates to in excess of eight percent. Indeed, in terms of growth potential of major Asian economies, it is only in these three cubs that we expect increases,”

Source: PTV News