2014 RP GDP predicted

The Philippine export sector is headed for double-digit growth for the third quarter of 2014 as an effect of the improving United States economy but the gross domestic product (GDP) for this year will be “disappointing,” leading publication Market Call predicted in its latest issue.

The publication’s issue this June sees many possibilities, ranging from effects of slow rehabilitation of the Yolanda-hit areas to higher inflation for the end of second quarter due to rice crisis and nonstop increases of fuel in the world market.

Market Call, the joint publication of First Metro Investments Corp., the investment banking arm of Metrobank and the University of Asia and the Pacific capital markets research, said its bold predictions were based on thorough research and market trends.

Though the publication didn’t predict the country’s GDP for 2014, the paper insisted that it is due to “unexciting Q1 2014 earnings result.” 

“With Q1 2014 GDP coming at a slower clip versus market’s expectations, we do not see these high market multiples to be sustained in the near future.

Unexciting Q1 2014 earnings results, which failed to meet expectations, support our view that valuations may come down. 

In light of the disappointing GDP numbers, we see glamor stocks losing their leadership roles,” the publication said.

If the publication will not be short of its prediction, it will support the foresight of the Philippine Exporters Confederation (PhilExport) of better export figure for next year and 2016.
 

PhilExport expects export revenues for the merchandise and services sectors to still reach $92 billion and $28 billion by 2016, respectively.
 

“The hope for booster from the relief and reconstruction spending in Yolanda-stricken areas has to wait for late Q2, as national government has just completed its comprehensive plan,” the publication said.
The entity said the uncontrollable rise in fuel prices in the world market remains a major challenge to the national government. “This, together with revived exports, should easily enable the economy to grow faster (at around 6.3 percent) in Q2. 

Fuelled by rising rice prices, due to the delayed decision to import rice and crude oil prices remaining high due to the Middle East and Ukranian crises, inflation would likely pick up pace in Q2.
 

However, we will likely see it peak at the same time, as rice and oil prices stabilize. With the solid economic data emanating from the US economy and the escape of the Eurozone from a two-year recession, we expect exports to take a double-digit growth path all the way to Q3,” the publication said. 

Inflation, the rise of prices of main commodities, is also a major scenario to watch, it said. 

“While we are seeing a bumping up of headline inflation rates, supply factors have primarily caused this.
We think inflation rates, unless they unexpectedly jump, may take a back seat in determining bond yields. Besides, with US Treasuries now expected to be soft for the rest of the year, we see a slight to moderate easing of longer-dated bond yields in Q3. 

It is also likely NG will resume issuing progressively longer tenor bonds as yields have stabilized. With more issues, secondary trading should also become more active,” Market Call added.

source:  Tribune