2020 growth seen at 6.3% by Maybank Kim Eng

ECONOMIC GROWTH is expected to come in at 6.3% in 2020 amid monetary easing and following the timely approval of the budget, according to analysts from Maybank Kim Eng.

It said downside risk could come from “populist’ policies including the crackdown on some business deals.”

“Growth is expected to strengthen to 6.3% in 2020 on additional monetary policy easing plus fiscal stimulus from the higher 2020 budget, spillover of 2019 government spending, and corporate tax cuts,” Suhaimi Ilias, regional head of economic research at Maybank Kim Eng said at a briefing in Makati Thursday.

The firm’s estimate is below the 6.5-7.5% targeted by the government for 2020 and 2021.

Growth in 2019 was 5.9%, with a 6.4% performance in the fourth quarter insufficient to meet the 6% low end of the government’s target range.

Mr. Ilias said the government’s push to expand its infrastructure program by taking in more public-private partnerships will bode well for the economy.

“The higher number of PPP projects (will) catalyze the execution of infrastructure investments going forward,” he said.

He noted that the new direction of the “Build, Build, Build” program to focus on smaller projects will be beneficial to more provinces as they will get roads, bridges, and irrigation systems which were not included in the original list.

Meanwhile, Mr. Ilias said he was keeping an eye on “so-called populist policies that have affected companies and their share prices.”

“I view this differently, not necessarily negative. Maybe he is just sending a message to the companies that are bidding for PPP projects… moving forward… I believe this will eventually be resolved… (and will result in) acceptable PPP deals moving forward,” Mr. Ilias said.

President Rodrigo R. Duterte has ordered the review of “onerous contracts” that are disadvantageous to the government, including the water supply contracts for Metro Manila.

Mr. Ilias said that the economic risks from the spread of the coronavirus are likely to be short-term.

“I think one important factor right now is the constant update by relevant authorities to the cases and the measures that have been taken to contain it.”

“As opposed to SARS, there’s a global effort to find a remedy. My view right now is that it won’t be a prolonged situation,” he added.

Mr. Ilias also said that inclusive growth continues to be a challenge, noting “the stubbornly high youth unemployment rate of around 13% versus the 8% target.” — Luz Wendy T. Noble