HIGHER GROWTH. Sun Life Investment Management and Trust Corporation Chief Investment Officer Ritchie Teo on Thursday (Feb. 22, 2024) expressed expectations for the Philippine economy to grow at a faster pace in 2024. He said the government's growth target is also achievable as consumption and investments are expected to pick up. (Photo from Sun Life)
MANILA – The government's 6.5 to 7.5 percent economic growth target for this year is attainable as the projected decline in interest rates will help boost consumption and investments, a top official of Sun Life Investment Management and Trust Corporation (SLIMTC) said on Thursday.
"It seems like it’s something that's still attainable. Let’s see when rate cuts are there and especially when those infrastructure projects are in," said SLIMTC Chief Investment Officer Ritchie Teo in a briefing at the Milestone Building in Bonifacio Global City in Taguig City.
According to Teo, the Bangko Sentral ng Pilipinas (BSP) is projected to cut rates by a total of 100 basis points this year as inflation continues to ease.
Headline inflation, which reached 6 percent in 2023, is projected to settle at 3.8 percent this year.
Teo said the BSP will likely wait for the US Federal Reserve to slash interest rates thus, the first rate cut is forecast to happen around June or the early part of the second half of the year.
"Probably good to say they will only cut when Fed cuts. They will wait for Fed so probably that's on the latter part. Not in April, maybe in June or early second half," said Teo.
SLIMTC expects the US Federal Reserve to cut policy rates by 75 to 100 basis points by mid-year as US inflation returns to target.
"They [BSP] will leave some [easing] on the latter part of the year mainly because of risks like the November election. So it's good to have something on the table," he added.
Teo said the lower interest rates will boost consumption and private investments, which in turn will help accelerate the country's economic growth.
"Based on the latest gross domestic product (GDP) forecast, we anticipate 6% growth for 2024, largely driven by higher consumption and private investments," he said.
Government spending especially on infrastructure projects is also expected to be one of the major growth drivers for this year.
"If you look into the investment side, maybe more on the government, given that they've been trailing but for the private investments, especially with the rate cuts, again their spending will improve because with the higher interest rates, some are really holding back," said Teo.
Teo, meanwhile, said that for Philippine equities, the Philippine Stock Exchange index is expected to reach 7,200 by the end of the year.
He noted, however, that the market needs to stay above 6,700 to maintain the momentum. (PNA)
