Also, the IIF said that in three years to 2014, yearly domestic growth of the Philippines would be above 6 percent.
The think tank said that the country’s gross domestic product would follow through with a growth rate of 6.8 percent next year after the latest forecast of 6.5 percent for 2012.
These are upgrades of IIF’s previous forecasts of 5.7 percent this year and 6.5 percent in 2013.
In 2014, the IIF predicts that the Philippine economy will grow slower at 6.2 percent, to be overtaken by India and Indonesia for second and third place after China.
“The Philippines stands out for its strong growth this year,” the IIF said. “Real GDP was 7.1 percent greater in the third quarter than a year earlier—up from 6.2 percent in the first half, and 3.9 percent for 2011.”
Also, the IIF observed that exports of electronics products—which “sharply depressed” total Philippine exports in late 2011—recovered early this year.
Latest data from the National Statistics Office showed that exports grew by 6.1 percent year-on-year in October, while electronics shipments was almost flat at 0.3 percent.
“The reduction in the budget deficit gave the government some fiscal headroom this year to stimulate domestic demand, while consumption continued to be buoyed by inflows from workers abroad,” the IIF said further.
The think tank also noted that remittances reached $17.3 billion in the first nine months of 2012, which was 5.7 percent higher year-on-year.
Regarding the peso, IIF expected it to trade at 40.90 against the US dollar by year-end, strengthening further to 40.80:$1 in 2013.
The local currency will be much stronger in 2014 when it is expected to trade at a round 40 against the greenback.
But, if the 2007 average exchange rate is regarded as 100, the peso is continually weakening to an equivalent of 107.7 in 2012, 111.4 in 2013 and 114.1 in 2014.