MANILA, July 21 — A stock brokerage venture between BDO Unibank and Japanese investment banking giant Nomura sees a higher Philippine economic growth forecast of 6.7 percent this year and 6.8 percent in 2018, confident about export outlook amid healthier global economy.
“Domestic demand is the strongest in Asia. The Philippines also enjoys a healthy fiscal account, low leverage, and a young population; an investment boom looks underway,” said Dante R. Tinga Jr., Senior Vice President and head of research of BDO Nomura Securities Inc. in a press briefing.
The country’s gross domestic product (GDP) accelerated by 6.4 percent in the first quarter of 2017 due to the absence of election-related spending.
Tinga said economic forecasts incorporate the passage of the first package of the Comprehensive Tax Reform Plan (CTRP) bill.
The first package, which involves lowering personal income tax and estate and donor’s tax, is due for passage within this year.
Tinga said the Philippines is also positioned for higher potential structural growth, with tax reform programs and the implementation of the government’s infrastructure development serving as key catalysts.
The Duterte administration aimed to ramp up infrastructure spending to PhP8.4 trillion in the next six years under its “Build, Build, Build” program.
“If those catalysts happen, I think the Philippines will be more attractive as an investment destination both for local investors and foreign investors. You see investments go up even further if those reforms happen,” he said.
Tinga considered the implementation of government plans for tax reform and infrastructure rollout as potential “game changers.”
Tinga said bullish macroeconomic forecast supports positive outlook for equities.
“Philippine stocks could see an upward re-rating if the government successfully executes on tax reform and accelerated infrastructure spending,” he added. “If these reform catalysts happen, it just amplifies our views on the stocks sector that we like.”
Tinga said they are bullish on property, industrials, conglomerates, and mid-cap/small-cap consumer. (LDV/)
