Philippines' GDP pegged to hit 6.4%

It's still on an 'extended sweet spot of growth'.

According to DBS, its 2013 GDP growth forecast been revised up to 6.4% from 6.0% previously on the back stronger-than-expected 1Q numbers. Meanwhile, DBS' inflation forecast has been pushed down to 3.1% from 3.4%. For 2014, its GDP growth projection remains unchanged at 6.0% while the inflation forecast has been reduced to 4.0% from 4.2% previously.

Here's more:

The economy is currently in an extended sweetspot ofstrong growth and low inflation. Notably, 1Q GDP reached 7.8% YoY,the fastest pace in ASEAN, outpacing even China. The consistent outperformance overseveral quarters suggeststhatthe economy may be transiting towards a higher growth place.

The strength in the numbers was even more impressive despite the drag on headline growth from weak external demand.

Despite robust GDP growth forseveral quarters, inflation hasstayed below 3.5% YoY since October. Lackluster commodity prices and stable food prices have gone a long way towards keeping a lid on price increases overthe past few quarters.

With the global economy not gaining much traction just yet and assuming that adverse weather conditions do not occur, the outlook forinflation remains benign.

To be sure, the cumulative 150bps cuts in the special deposit account (SDA)rate and restrictionsto the SDAs suggests that credit growth is likely to be supported over the medium term, which should stoke inflationary pressures. However, the gradual uptick is not likely to prompt any monetary tightening until 1Q14.

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