Reading Time: 3 minutes

IMG_8927 (Medium)

Date: January 7, 2016

Venue: Makati Shangri-La Hotel




First Metro Investment Corporation expects the Philippine economy to sustain moderate growth in 2016.

The country’s GDP is projected to expand by 6-6.5% underpinned by sound macroeconomic fundamentals, robust domestic consumption fueled by OFW remittances and the continuously growing BPO sector, stable Philippine peso weighed against other currencies in the region, persisting moderate inflation and declining oil prices.

First Metro president Rabboni Francis Arjonillo said, “Our outlook for the Philippines remains optimistic but guarded due to some uncertainties in the local financial markets and global economic weakness. The country’s economic performance will still be among the highest in the region. The faster implementation of public infrastructure projects, continuing private construction, strong domestic consumer demand, heightened election-related spending, and better exports will provide boost to GDP growth in 2016.”

A moderate inflation environment will persist as prices of rice and other major food items remain stable along with declining fuel price. Inflation is seen to average at 2.5%, still within the government’s target of 2.4%; despite the effects of El Niño in agricultural output, which will be cushioned by lower oil price in the world market and large importation of rice.

OFW remittances is expected to slow down to 0-2% as oil producing countries suffer from budget deficit due to declining oil price. Nonetheless, the demand for skilled manpower overseas will remain steady.

Exports are projected to pick up to 5-8% as the US economy continues to recover while imports are likely to grow 2-5%.

The US dollar will further strengthen as a result of an improving US economy. The Philippine peso is estimated to trade within 48-49 against the dollar.

In the fixed income market, foreign exchange, inflation, and money supply will continue to impact interest rates movement. Bond rates are projected as follows: 5-year at 3.75-4.25%, 10-year at 4.25-4.75%, and 20-year at 5.25-5.75%.


Infrastructure spending is projected to grow 4.5-5% on expectation of smooth and faster implementation of big ticket PPP projects.


In equities, corporate earnings are expected to grow 13.8%. The PSEi is likely to hit a high of 7,500 in 2016 with EPS growth of 13% and price earnings (PE) ratio of 18x. Sectors seen to lead the index are holding companies/conglomerates, consumer/retail and banking. There are pockets of opportunities in the property sector but growth is projected to be generally moderate.


A cautious capital markets will be evident in 2016. Capital-raising may accelerate in the second half of the year as issuers await the results of the May elections. The rise of mid-tier names in cross border acquisitions is also foreseen. A number of project finance transactions are likewise in the pipeline and expected to close within the year. In equities, bite-sized companies will continue to tap the market to raise capital.


“The Philippine economy will remain healthy in 2016 but we must learn from our experience in 2015. We predicted a very strong growth in almost all sectors in 2015, but there were internal and external developments as well as long standing structural constraints that kept our growth rate closer to the ground. Global growth continued to be anemic, infrastructure developments coupled with government underspending were disappointing, FDI growth was still the slowest in the region, structural problems and inefficiencies in agriculture were a drag as well. We remain optimistic but guarded, more reserved, and more attentive to local and international developments that seem to hold back the Philippines from taking off as we have hoped in the past year or years,” said First Metro chairman Francisco Sebastian.

Slide presentations can be downloaded here:

Related posts