Philippine economy forecast in 2013

A Sunlife Financial executive expects the Philippine economy to have gown by 6.5 percent in 2012 and between seven to 7.5 percent this year, given the continued improvement in the country's economic fundamentals.

These projections are generally higher than the government's five to six percent target growth, as measured by gross domestic product (GDP), for 2012 and six to seven percent for 2013.

In an investors' briefing Wednesday, Sunlife Financial Asia Investment Managing Director Michael Manuel said the continued rise of the domestic economy remains fuelled by several factors such as strong domestic consumption, low interest rates, better fiscal situation and higher confidence by both local and foreign investors.

In the first three quarters of 2012, the domestic economy grew by 6.5 percent, while growth in the third quarter alone stood at 7.1 percent, highest in the ASEAN and next after China.

The government is scheduled to report the 2012 fourth quarter and full-year growth on Thursday.

"There is still a lot of potential to grow no matter if our growth has been strengthening," Manuel said.

Manual also disclosed his expectation for the continued strengthening of the peso to about 38-39 to a dollar this year.

To date, the peso continues to trade between 40-level against a US currency.

Also, the local bourse is projected to continue its rise and is expected to surpass the 6,300-level this year, a level, which he said, was considered by analysts as unthinkable before the end of 2012, given the correction in the last few days of the year after several days of rally.

The Philippine Stock Exchange index (PSEi) closed to its 12th record high this year at 6,271.23 points.

Manuel, however, cautioned the investing public on leaning on the main index alone saying that when they do this "there's not much growth."

"There are stocks that are not part of the index but can produce higher growth (and these include) power generation, banking and property sector," he said.

Meanwhile, Manuel expects interest rates in the country to "go lower but not too much."

For one, the central bank has cut its policy rates by a total of 100 basis points last year to support growth of the domestic economy.

In its meeting last week, the central bank's policy-making Monetary Board (MB) decided to maintain the rates for the second consecutive policy meeting after citing the lesser need to boost domestic growth.