CONSUMER spending and exports are the main growth drivers for the country’s economy this year, international banking giant Standard Chartered Bank (SCB) reported last Friday.
Nicholas Kwan, Standard Chartered Bank regional head of research in Asia, said rising consumption levels and growing exports would lead the recovery of the country’s
economy, which is projected to have grown 6.4 percent in the second quarter this year.
“Consumption is one area that is supporting us,” Kwan said during SCB’s mid-year economic briefing held at the Cebu City Waterfront Hotel and Casino last Friday.
He said the Philippines is a special performer among all small open economies in Asia because it was less affected by the global recession.
Data from the National Statistical Coordination Board (NSCB) showed that consumer spending continued to expand in the first quarter of 2010 to 5.9 percent from 3.0 percent last year.
The country’s economy ended the first quarter with a 7.3 percent growth, which was bolstered by election spending. The growth prompted government and international banks to upgrade the country’s economic forecast for the year.
SCB projected the country’s economy to grow at 5.9 percent this year, an improvement from its earlier projection of 3.3 percent.
“Export performance in the last two months showed a quick rebound. It has picked up, leveling with imports,” Kwan said.
Exports increased 37.7 percent to $23.71 billion in the first half of the year compared with the $17.22 billion recorded in the same period last year, according to National Statistics Office (NSO). June exports grew 33.4 percent to $4.54 billion.
Kwan said stable remittances from overseas Filipino workers cushioned the current economic downturn.
“The country’s improving remittances will help stabilize the country’s external payment,” he said.
But he said that to fuel economic growth, the country should improve its fiscal, asset and exchange rate management. Kwan also reported that the country’s inflation is manageable.
“We don’t see any medium or long-term threat as food and fuel prices would not be that much higher. If there is an inflation threat, it would be coming from domestic issues as everyone might want higher wages or taxes, among others,” he said.
Inflation refers to the rise in the general level of prices of goods and services in an economy over a period of time. SCB’s forecast for the country’s inflation this year is at 3.8 percent.
SCB is one of the world’s leading international banks. It has been operating for over 150 years.