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MANILA - Metrobank has upgraded its growth forecast for the Philippines this year to 5.5 percent from the earlier estimate of 4.6 percent.
In its latest Economic Weather Report, Metrobank said the country's gross domestic product will continue to get its strength from consumer spending, which will be fueled by remittances and expectations of benign inflation.
Metrobank forecast full-year inflation to average 3.4 percent, or at the low-end of the Bangko Sentral ng Pilipinas target range of 3-5 percent. As for remittances, the BSP forecast 5 percent growth this year.
Given manageable inflation, Metrobank expects short-term interest rates to stay below the BSP policy rate of 4 percent.
"Moreover, downward pressure is seen for the short-term debt papers amid still high market liquidity, easing inflation, and continuing uncertainty in the global economy," said Pauline May Anne Revillas, Metrobank research analyst.
On the supply side, economic growth would be driven by the services sector, particularly the real estate and tourism sub-sectors, according to Revillas.
She said public construction would boost the economy in the second semester, as government spending accelerates in preparation for the mid-term elections in 2013.
As for the peso, Metrobank expects support to come from the country's "strong economic fundamentals and favorable international liquidity position."
Revillas said the possibility of another round of quantitative easing by the Fed to support the US economy would pull down US Treasury yields, thus weighing on the dollar.
In light of this, Metrobank forecast the exchange rate to end the year at P41.75:$1.
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