Long-term growth ‘still achievable’

Not factored in. Protesters in Manila splash red paint at the logo of Shell to denounce the new round of oil price hikes. ATR Asset Management Group chief investment officer Phillip Hagedorn says the unexpected rise in oil prices in the world market and tight supply in rice were not factored in when the government estimated the effects on the prices of goods when the Tax Reform for Acceleration and Inclusion Law was implemented, leading inflation to shoot up. (AP Foto)
Not factored in. Protesters in Manila splash red paint at the logo of Shell to denounce the new round of oil price hikes. ATR Asset Management Group chief investment officer Phillip Hagedorn says the unexpected rise in oil prices in the world market and tight supply in rice were not factored in when the government estimated the effects on the prices of goods when the Tax Reform for Acceleration and Inclusion Law was implemented, leading inflation to shoot up. (AP Foto)

THE long-term outlook for the Philippine economy remains positive, amid the economic challenges the country is facing.

ATR Asset Management (Atram) Group chief investment officer Phillip Hagedorn yesterday said they see the Philippine economy growing between six and 6.4 percent this year amid global and domestic economic pressures.

Hagedorn said despite the downgrade in forecasts by international financial institutions, they are “pretty confident” that the gross domestic product (GDP) will remain high. GDP is a measure of the market value of final goods and services produced.

He noted that the government has money and that the investment cycle, which has long been overdue, is finally taking hold.

“That six percent is something that we could count on moving forward,” said Hagedorn.

“We are growing faster than China. We are the number four in Asia, and I think that will continue, purely because we are investing and the consumption demand is still very robust,” he added.

The Asian Development Bank (ADB) revised its economic growth outlook for the Philippines to 6.4 percent for 2018, as the country’s GDP growth softened in the first half of the year. The International Monetary Fund, on the other hand, expects the country’s GDP to grow 6.5 percent, a downward revision from the 6.7 percent estimate in its July report.

While the country expected a minimal spike of prices on consumer goods due to the first tax reform package, Hagedorn said the unexpected jump in oil prices in the world market and the tight supply in rice weren’t factored in, which led to the high inflation.

Hagedorn sees the high inflation as transitory and expects it to stabilize in the near term. He, however, said the prices of oil may remain high in the coming months--at $70 to $80 a barrel.

“But the government is treating this issue seriously,” he said, adding that passing the proposed rice tariffication bill will help mitigate further spikes in food prices.

Besides domestic pressures, the volatility of the global market is also affecting the country’s performance in the stock market.

The Philippine Stock Exchange index (PSEi) on Thursday plummeted to its lowest close since June 25 at 6,884.38. The PSEi is now 24 percent lower than its record-high of 9,058.62 last Jan. 29. It recovered to 7,004.77 yesterday.

In a separate interview, COL Financial president Dino Bate said, “The reason for the recent drop in our market was caused by the sharp decline in the US market, which was the only market holding the global markets up.” US stocks fell sharply on Thursday amid fears of rapidly rising interest rates and a possible global economic slowdown.

Bate thinks that in the short term, the market will remain very volatile, especially since it broke the critical support of 6,900.

He said that at current levels, the market is presenting good values and will reward those that take advantage of this as long as they remain in the medium (two to three years) to long term (three to five years) in this market.

Asked if it’s a good time to sell shares, Bate said, “I think the market is oversold so it’s not a good time to sell. It’s best to wait for the market to bounce.”

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