Philippines' GDP growth seen to ease to 4.1-5.9%

But the 6-7% forecast is still on the cards.

According to DBS, the government has just indicated that 4Q GDP growth may ease to 4.1-5.9% depending on the actual damages from typhoon Haiyan.

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That will pull down overall GDP growth for the year but 2013 GDP growth of 6-7% YoY is still on the cards. For now, we’d still maintain our 7% GDP growth projection for the year.

The 3Q GDP data that is due at the end of the month is likely to show GDP growth remaining circa 7% YoY. That will bring GDP growth to about 7.5% YoY in the year-to-date. The recent string of data has been rather encouraging.

There are some signs that export growth might have bottomed out in 1H 2013. Exports reached USD 5bn for the first time ever in September, a 4.9% YoY growth.

Demand of electronics and electrical products was rather strong, suggesting a pick-up towards the year-end. This has also led to a bounce in industrial production, which has averaged close to 8% YoY in 3Q.

Earlier this week, BSP Governor Tetangco commented that the central bank has some policy scope to respond if necessary. While the central bank has adjusted its 2014 inflation forecast to 4.5% up from 4.0% previously, it is still well within the 3-5% target. Normalization in monetary policy is still warranted, but the BSP may now be less aggressive in doing so next year. Stay tuned on this front.