THE PHILIPPINES is set to recover over the course of the year even in the face of rising inflation and global supply chain disruptions, with the economy boosted by election spending and the restoration of much business activity as movement restrictions ease, Sun Life Investment Management and Trust Corp. said.
“Fundamentally, the Philippines continues to be strong despite inflation and interest rate headwinds. We’ve been seeing mobility continue to be sustained in spite of certain COVID-19 scares,” the company’s President and Chief Investment Officer Michael Enriquez said in an update of the Sun Life Investment macroeconomic outlook.
The company projects gross domestic product growth of between 6.3% and 10% this year.
“I think the people are starting to become immune, not only from the virus, but (from the fear of) COVID-19, because they really want to get on with their lives and livelihood.”
Increases in the COVID-19 case count have been small, he added, which suggests the reopening of the economy will proceed.
Growth is still expected because demand for key goods in the consumption-driven economy is inelastic, Mr. Enriquez said, meaning that buyers are less likely to be deterred by price increases.
“There has been some confidence already on expansion (and) borrowing by consumers, so definitely, spending is there,” he added, “despite these global headwinds, domestically our economy is okay.”
Mr. Enriquez said that there is also room for investment to grow, particularly on the Philippine Stock Exchange index (PSEi).
“The PSEi is cheap right now… so in terms of risk-reward, there’s a higher upside potential at these levels for the PSEi… compared to downside risk.”
Mr. Enriquez added that “markets generally move higher during Presidential election years.”
The company sees the peso trading at P51-53 or P52-54 by the end of the year and expects the Bangko Sentral ng Pilipinas to tighten policy by up to 75 basis points by the end of 2022. — Diego Gabriel C. Robles