By Neil Jerome C. Morales (The Philippine Star) Updated March 26, 2012
12:00 AM Comments (0)
CLARK FIELD, Pampanga (via Wi-Tribe), Philippines – BDO Unibank, Inc.,
the country's largest lender in terms of assets, expects the economy to
grow faster this year while interest rates will remain low and inflation
manageable.
Benefits of the higher government spending will likely take effect late
this year that will increase consumption spending.
Growth in gross domestic product will likely reach 4.5 percent this year
from 3.7 percent last year, Jonathan L. Ravelas, chief market strategist
at BDO Unibank, Inc., said at the Economic Journalists' Association of
the Philippines-San Miguel Corp. Business Journalism Seminar in Pampanga.
The projection is lower than the government budget assumption of a
5.5-percent uptick.
Ravelas said the economic scenario will be like last year, with numerous
factors that could dampen growth.
"All the problems are still here. Who is next [in the Eurozone debt
crisis]? For the US, we are not sure because their recovery stems from
the fourth quarter so it is all about spending during the Christmas,"
Ravelas said.
"The good thing about our country is it signals spending. In the second
half, we will see the rewards of these things," Ravelas said.
The government has set a budget deficit ceiling of P286 billion this
year. Last year, the government incurred a deficit of P197.8 billion,
below the P300 billion deficit ceiling set for 2011.
Meanwhile, BDO Unibank projects inflation and interest rate of
three-month Treasury bills to average at 4.5 percent and three percent,
respectively, from 4.7 percent and 1.66 percent last year, respectively.
The government expects inflation to average three percent this year.
But a spike in oil prices might dampen economic growth, Ravelas said.
"If Iran is to be attacked, it will trigger $140 per barrel," Ravelas said.
Dubai crude, the benchmark for Asia, stood at $123.10 per barrel as of
March 21, up from $122.15 per barrel as of Mar. 16.
International oil prices remain high given continued tensions over
nuclear program of oil producer Iran.
Ravelas said $120 to $130 will be manageable, with oil prices to
normalize at $100 by yearend.
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