MANILA, Philippines - Investment bank JP Morgan has raised its economic growth projection for the Philippines this year to 6.8% from the previous 4.5% after faster-than-expected growth in the first quarter.
JP Morgan also said that continued growth, along with increased tax revenues, would allow the government to trim the budget deficit to its full-year goal of P293.2 billion.
"The tax collection trend in the first 4 months of the year is encouraging with the Philippines' main tax agencies posting actual collections higher than their respective goals. If this is sustained, this should help the government meet its goal of trimming fiscal deficit," said JP Morgan sovereigns analyst Matt Hildebrandt.
"We do expect sequential growth to moderate from its blistering pace recently," he added, referring to the country's gross domestic product (GDP).
Philippine GDP grew 7.3% in the first quarter from a year ago buoyed by global recovery, which spurred exports; election spending; and increased remittances from overseas Filipinos. The first quarter GDP exceeded the government's 2.9% to 3.9% growth projection.
Consumption, which makes up nearly two-thirds of the economy, was supported by a 7% annual rise in remittances and record spending by the government, including on infrastructure projects, ahead of a ban on new state contracts before the May 10 national elections.
Exports, on the other hand, surged 43% as demand for electronics shipments recovered from the previous year's crisis-induced lows. Exports account for about two-fifths of GDP in expenditure terms.
The Philippines was one of the few countries in the region to skip a recession in 2009, helped by government stimulus spending.
However, accelerated public spending, along with low tax collections, widened the budget deficit last year to a record P298.5 billion.