GDP GROWTH LIKELY TO SLOW TO 5% THIS YEAR, SAYS DIOKNO
Bangko Sentral ng Pilipilinas or central bank governor Benjamin Diokno said the country’s gross domestic product (GDP) growth in 2020 is likely to decelerate to 5% from 6.5% to 7.5% initially projected. In 2019, the Philippine economy grew by 5.9%, the slowest pace in eight years. The central bank chief said the Association of Southeast Asian Nations (ASEAN) is likely to book a slower 3% GDP growth in 2020. The central bank’s Monetary Board has also cut interest rates to infuse more funds into the domestic economy.
The Philippine economy expanded by 5.9% in 2019, the slowest in eight years. The rebound we expected in 2020 is now threatened by the COVID-19 pandemic with analysts and the Philippines' economic managers revising downward their economic growth forecast for the country in 2020.Colliers believes that the travel ban imposed due to COVID-19 is likely to affect the expansion of Chinese offshore gaming firms in the country; temper the take-up of secondary residential units in sub-markets that house several POGO firms; and dampen tourist arrivals which should result in lower hotel occupancy and average daily rates (ADR) in Metro Manila.
2019 FDI FALLS ON GLOBAL UNCERTAINTIES
The Philippines attracted USD7.647 billion in foreign direct investments (FDI) in 2019, about 23% lower YoY. According to the Philippine central bank, among the major sources of investments in 2019 were Singapore, Japan, and the United States. The investments were channeled into the financial, insurance, real estate, electricity, gas, steam and air-conditioning supply, and manufacturing sectors. The Philippines’ FDIs’ are lower compared to regional peers. In 2019, Indonesia attracted USD28.2 billion while Malaysia received some USD15.3 billion from January to September 2019. new projects within 24 months.
The Philippines continues to attract one of the lowest levels of FDIs in the Asian region. Apart from protectionist policies, foreign investment inflows have been paltry due to dilapidated infrastructure and poor performance in global competitiveness surveys. To address these, the national government has been implementing efforts to improve business registration systems and setting aside more funds for public projects. The Philippine congress, meanwhile, is keen on passing laws that would allow more foreign investments into key economic sectors such as retail. In our opinion, the passage of these measures should stoke property segments such as retail and office, as more foreign firms are likely to occupy new office space. Industrial parks and warehouses may also benefit from higher manufacturing investments. However, FDI inflows in 2020 are likely to be threatened by the COVID-19 pandemic.
TORRE LORENZO ALLOTS P7B FOR ‘PREMIUM’ PROJECTS
Torre Lorenzo Development Corp. (TLDC) is setting aside up to P7 billion (USD 138 million) to expand its residential and leisure projects. For this year the firm is planning to launch new residential and mixed-use projects in Manila, Davao, and Quezon City. It is also expanding its leisure projects in Batangas, Pampanga, Manila and Davao. In the long run, TLDC aims to raise the contribution of its hotel business to the firm’s total revenues.
Metro Manila developers have been launching new projects in the fringes of major business districts. These residential units cater to professionals, students, and early nesters. TLDC’s projects are spread all over the Philippines, indicating that demand for residential and leisure projects is no longer Metro Manila-centric. Among the major demand drivers for residential units outside the capital region has been the sustained remittances from Filipinos working abroad. The leisure sector, meanwhile, has been driven by growing foreign and domestic tourists. Colliers, however, sees a decline in overall demand for property developments due to the COVID-19 pandemic.