The investment banking arm of the Metrobank Group expects the Philippine economy will return to its positive territory this year as overseas Filipino remittances and government spending are seen to boost growth.

First Metro Investment Corp. (FMIC) said it is “cautiously optimistic” for the recovery of the country’s economy in 2021 as it expects gross domestic product (GDP) will expand by 5.5 percent to 6.5 percent.

After contracting 10 percent in the first three-quarters last year, FMIC said that this year’s growth will be supported by overseas Filipino remittances, which is seen to increase by 4.0 percent to 6.0 percent.

FMIC also said that government spending as well as its market reform initiatives, including the tax reform programs, will help the recovery.

 “Other factors that will boost growth are the mild inflation rate of 2.7 percent and the completion of big-ticket projects,” FMIC said.

Among these infrastructure projects were the Metro Manila Subway, North rail, South Luzon Expressway-Extension, North Luzon Expressway-East, metro rail transit (MRT-7), and Connector-2.

 “The roll-out of the vaccine and a more focused and localized restriction will likewise improve the country’s economic performance in 2021,” the investment firm added.

Jose Patricio Dumlao, First Metro president said the country experienced one of the worst years in 2020, and yet it have lived through it.

“Even in the midst of the pandemic, private companies were able to raise an unprecedented amount of $8 billion in the offshore market,” Dumlao noted.

"Our GIR (dollar reserves) hit an all-time high, supporting the peso, OFW remittances and the IT-BPO sector also defied bleak expectations. Considering what we have achieved despite the odds, we expect the Philippine economy to rebound in 2021,” he added.

Economic expansion will also be reinforced in the fiscal space by the declining debt-to-GDP ratio and interest-to-total National Government expenditure in the past years, FMIC said.

“The less daunting external environment with the International Monetary Fund (IMF) being less pessimistic of recovery despite the second wave of COVID-19 infection also bodes well for a faster recovery,” FMIC said.

After slumping to -11.1 percent year-to-date November 2020, FMIC expect exports to perform better this year at 15 percent to 18 percent, while imports will be at 20 percent  to 24 percent.