HSBC sees steady PH economic growth

PHILIPPINE economic growth will remain steady, HSBC said, given continued robust private consumption and expectations of a moderate monetary policy tightening.

Cheuk Wan Fan, head of investment strategy for Asia at HSBC Wednesday that they expected the Philippines to grow by 6.7 percent this year before accelerating to 6.8 percent in 2019.

The government has a 7.0-8.0 percent target for both years.

Fan also said that HSBC had a “neutral view” on Philippine equities as “high remittances and strong investments support robust economic growth and steady earnings performance.”

“This helps mitigate risk of the high valuations of the Philippine stock market,” she added.

Fan said a rising middle class with a strong desire for consumption across Asia boded well for the sectors such as entertainment, education services, healthcare, lifestyle, and travel.

HSBC also expects the region to benefit on China’s Belt and Road Initiative and Fan said that Philippine corporation should also look into partnerships Chinese infrastructure companies to complement the government’s “Build Build Build” program.

“’Build Build Build’ is a key infrastructure development initiative … and the Chinese government has already indicated their strong support for infrastructure development opportunities in the Philippines,” Fan said.

The Bangko Sentral ng Pilipinas,

adjust interest rates to address ris

“Currently, [we see a] 25 basis points hike in interest rates in the second quarter of this year and we only expect one more hike in 2019 if the domestic economy sees continues to move up faster than expected.” Fan said.

More aggressive action could be in the cards, however, if the global interest rates cycle picks accelerates.

“But so far, we only anticipate tightening in the country as we expect CPI (consumer price index) to average at 3.4 percent this year,” she added.

last year just above the mid-point of the Bangko Sentral ng Pilipinas’ 2.0-4.0 target and the highest reading since 2014’s 4.1 percent.

In November, the central bank’s policymaking Monetary forecast to 3.4 percent from 3.2 percent, citing higher oil prices, an expected increase in domestic liquidity and a weaker peso as primary factors.