HSBC trims growth forecast

British banking giant Hong Kong and Shanghai Banking Corp. cut again its growth forecast for the Philippines this year to 5.5 percent from the previous estimate of 5.6 percent made in July on the back of sluggish global trade, especially that of China.

Despite the revision, the Philippines’ growth trajectory was still seen as one of the highest this year, even outperforming those of neighboring countries in Southeast Asia, including Indonesia, Malaysia, Singapore and Thailand.

The Sept. 25 forecast of HSBC showed that the Philippines’ forecast this year was higher than Indonesia’s 4.7 percent, Malaysia’s 4.6 percent, Singapore’s 1.7 percent, and Thailand’s 2.6 percent. Vietnam’s was the highest in Southeast Asia at 6.3 percent.

HSBC saw the Philippines’ growth forecast slightly improving to 5.6 percent in 2016.

“Well, skeptics might still argue that it is China’s weakness that’s infecting everyone else, boomeranging back to the mainland in the form of weaker exports. But that can’t be the entire explanation,” HSBC said in its latest report titled “Don’t Just Blame China.”

“Let’s face it: for all their recent swagger, developed markets are hardly firing on all cylinders. So, don’t just blame China. Everyone’s got a role to play in keeping the world economy right side up,” the bank said.

HSBC in July reduced its growth forecast this year to 5.6 percent from 6 percent earlier on the back of sluggish global demand and anemic fiscal expenditures.

HSBC said weak global demand dragged net exports in the first quarter of the year by almost 2 percentage points. It said the contraction in net exports offset strong growth in private consumption, resulting in a slower-than-expected GDP growth of 5.2 percent in the first quarter.

The government later revised downward the first-quarter expansion to 5 percent due to lower growth estimates for public administration and defense, mining and quarrying, and agriculture, hunting, forestry and fishing.

Economic growth rebounded in the second quarter, expanding by 5.6 percent. This brought the first-half average to 5.3 percent, well below the government’s 7 to 8 percent target range this year.

Earlier, global debt watcher Moody’s Investors Service also lowered its growth forecast for the Philippines this year to 5.7 percent from the previous estimate of 6.7 percent made in May, due largely to decelerating export growth and government’s anemic fiscal expenditures.

The forecast for 2016 was also lowered to 6 percent from the earlier assumption of 6.5 percent.

The Philippines economy in 2014 grew 6.1 percent, well below the 7.2 percent

registered in 2013. Economists blamed the government’s lower fiscal spending as the culprit for the sluggish 2014 performance.

The government’s cautious spending, particularly in the third quarter of 2014, stemmed from the controversial disbursement acceleration program of the administration, which was ruled by the Supreme Court as unconstitutional. The court reversed the ruling later.

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