JP Morgan raises PHL growth forecast in 2014

By The GNP Team

Photo Courtesy of JP Morgan Chase.

American financial services giant JP Morgan forecasts the Philippine economy to expand at a faster pace than previously thought in 2014.

JP Morgan in a research report raised up its gross domestic product (GDP) growth forecast for the Philippines to 6.6 percent, or one percentage point higher than its outlook three months ago.

Although the new GDP forecast is slower than the 7.2 percent growth posted in 2013, which was an election year, the growth forecast is two percentage points better than the average forecast for emerging market peers and not too far from the 6.5-percent consensus outlook.

In the report, JP Morgan said it expected economic momentum as measured by quarter-on-quarter seasonally adjusted annual rate of GDP growth firming up at 8.7 percent this first quarter of the year before easing to 5.3 percent in the second quarter. Quarter-on-quarter growth is seen picking up to 6.6 percent in the third quarter and 7 percent in the last three months of 2014.

“We believe that robust macro growth will translate to EPS (earnings per share) growth surprise this year; we think banks will be the catalysts,” said JP Morgan Philippines head of research Jeanette Yutan.

“Domestic demand growth is robust. Government spending momentum is intact while capex (capital expenditure) cycle is seen across the major Philippine conglomerates,” she said in the research note.

Overseas Filipino remittances and the robust business process outsourcing (BPO) sector remain key domestic growth drivers, the study said.

JP Morgan included the Philippines and Indonesia in the roster of nine emerging markets where it has an “overweight” rating on, suggesting an increase in position in excess of key benchmarks. The other favored emerging markets are Korea, Taiwan, India, Thailand, Russia, Greece and Peru.