Thursday, 27 January 2011

Citi bullish, sees PH sustaining economic growth

by Roderick T. dela Cruz
Manila Standard

American financial giant Citi expects the Philippines to sustain its strong economic growth this year, with political stability in place following the election last year.

“We have strong conviction that Philippine prospects will be as good as any in Emerging Market Asia,” Citibank country head for the Philippines Sanjiv Vohra said in an e-mail to reporters.

Vohra said the election of the new president with his strong mandate affirmed the return of trust and confidence in government that might pave the way for strong partnership with the business sector.

“The favorable domestic political environment together with the government’s reform objectives create an environment conducive to sustainable growth and more importantly, investments over the medium term,” Vohra said.

Citibank said “banks will benefit from the investment-led growth path that the Philippine economy is expected to track in the medium term.”

“Sustained domestic demand and improved business confidence support a revival of capital spending among the corporates in 2011. In our view, Philippine banks’ low loan to deposit ratio of below 70 percent and strong capital position put them in a favorable position to support corporate re-leveraging,” the bank said.

It said a more broad-based expansion in the manufacturing and industrial sectors could fuel credit demand from the mid-sized corporates, which could offset the muted demand from the top tier companies which prefer to tap the capital markets.

The expansion in lending to the manufacturing sector is also encouraging given that this segment has contracted the most since the Asian financial crisis, it said.

Citibank said the regulatory environment for banking was conducive to credit growth, evident in the recent lifting of the single borrowers’ limit for infrastructure and development projects under the public private sector partnership initiative, which could spur big-ticket loans.

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