Filipino Economy to Grow

The Goldman Sachs sees remittance and IT service exports to continue powering the Philippine economy this year. 

In a report, dated May 27, 2010, the investment banking and securities firm said the recovery of the domestic economy "is firmly underway" as shown by the higher-than- expected gross domestic product (GDP) growth at 7.3 percent in the first quarter of this year, as reported by the National Statistical and Coordination Board (NSCB) Thursday.

The domestic economy grew by 0.5 percent in January to March of last year.

The government's 2010 first quarter growth target is between a range of 2.9-3.9 percent while the market expects it to grow by 4.4 percent.

Domestic demand jumped 10 percent year-on-year compared to the 5.9 percent in the last quarter of 2009, due to the increases both in the private and government consumption.

"Robust overseas remittances are likely to result in further upticks in private consumption over the next few quarters," Goldman Sachs said.

Remittances grew seven percent year-on-year in the first three months this year as demand for Overseas Filipino Workers (OFWs) continue to be high along with the global economic recovery.

Relatively, government consumption was strong due to relief and rehabilitation disbursements as a result of the typhoons that ravaged most of the Luzon area in the second half of last year.

"The 2010 first quarter GDP print confirms the recovery process is firmly underway, and we expect it to continue to get support from the two engines of flows – stable remittances and growing IT service exports," it said.

The investment firm projects a 4.2 percent growth for the Philippines this year, higher than the 1.1 percent last year, the consensus forecast of 3.9 percent, and the 2.6-3.6 percent target of the government.