Moody's sees central bank hiking rates as year ends [The Manila Times, Philippines]

July 13--INFLUENTIAL economic analyst Moody's Analytics said that the Bangko Sentral ng Pilipinas (BSP) may hike its key interest rates by yearend as the domestic economy expands with the help of public and private investments, and strong household consumption.

In a recent official statement, the economic analysis unit of Moody's said that it expects rate hikes from the central bank by the end of the year as "robust domestic activity starts to push the economy beyond capacity."

They noted that the country is earning from the Aquino administration's strategy of speeding government spending, accompanied by strong private sector investment in the services industry.

Moody's said that the strong growth of the business process outsourcing industry has offset the weakness in electronics exports, which make up half of the country's total shipments abroad.

Also, risks to inflation are evenly balanced given the easing prices of commodities in Asia alongside stronger government, household and investment spending.

This will give central banks in the region enough room to loosen monetary policy to make up for the weakness in other sectors.

Moody's also said that five members of the Association of Southeast Asian Nations, particularly the Philippines, Indonesia, Malaysia, Singapore and Thailand, will weather the global economic turmoil as domestic demand from these countries would keep them afloat.

Because of this, it added that the region remains a "bright spot" in a generally gloomy world economy as strong investments and household spending would compensate for the lackluster performance of its exports, traditionally its growth driver.

___

(c)2012 The Manila Times (Manila, Philippines)

Visit The Manila Times (Manila, Philippines) at www.manilatimes.net

Distributed by MCT Information Services