GDP growth seen to pick up to 6.3% – Maybank
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Thu, 30 Jan 2020 16:18:42 +0000
THE Philippine economy is expected to rebound in 2020 after falling to an eight-year low last year on the back of monetary policy easing, increased government spending and more tax reforms, according to an analyst from Maybank Kim Eng.
In a briefing in Makati City on Thursday, the bank’s chief economist Suhaimi Ilias said the country’s gross domestic product (GDP) growth “is expected to strengthen to 6.3 percent in 2020.”
His forecast falls below the government’s growth target range of between 6.5 percent and 7.5 percent for this year, but higher than the 5.9-percent gross domestic product (GDP) expansion recorded in 2019.
“Actual and outlook of moderate inflation that creates room for [the] BSP to ease its monetary policy in 2019 [and] 2020 could revive private consumption growth by more than currently expected,” Ilias said.
That said, he projected average inflation to hit 3 percent, or at the mid-point of the 2 to 4-percent target of the government, but higher than the 2.5-percent print in full-year 2019.
With inflation stable, Ilias sees another 25-basis-point (bp) cut in the Bangko Sentral ng Pilipinas’ policy rates and a 300-bp reduction in the banks’ reserve requirement ratio this year.
He also said the 2020 P4.1-trillion national budget could provide additional fiscal stimulus to the economy.
“There could be upside to our 2020 real GDP growth forecast, as the unutilized spending allocation from the delayed 2019 budget is allowed by law to be utilized until end-2020,” he explained.
Last, the economist said the implementation of the Corporate Income Tax and Incentives Rationalization Act (Citira) “can boost private sector capex” (capital expenditure).
The second package of the government’s Comprehensive Tax Reform Program, Citira aims to reduce the corporate income tax rate from 30 percent to 20 percent in 10 years.
It also aims to modernize the country’s fiscal incentive system to establish a single menu of incentives that are performance-based, targeted, time-bound, and fully transparent.