PH economy seen rising 6.3% in 2020
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Wed, 22 Jan 2020 16:16:36 +0000
THE Philippine economy is likely to grow to 6.3 percent this year on the back of strong consumption, easy monetary policy and double-digit corporate earnings, according to an analyst.
At Insular Life’s (InLife) 2020 economic outlook briefing in Makati City on Wednesday, Ivan Ante, global multi-asset portfolio manager at ATR Asset Management, said they expected the country’s “GDP to grow 6.3 percent this year. Where will it come from? Robust consumption, which is the first pillar of growth, and the second is a comeback of government expenditure.”
His forecast falls below the government’s growth target range of between 6.5 and 7.5 percent for this year, and comes as the Philippine Statistics Agency lowered its third-quarter economic growth figure to 6.0 percent from the 6.2 percent reported last November.
Ante noted that 70 percent of the Philippine economy is based on consumption, while the government is increasing its infrastructure spending from 3 percent to 7 percent of GDP by 2022.
In terms of stimulus, he expects the Bangko Sentral ng Pilipinas to cut banks’ reserve requirement ratio (RRR) by 2 percent and reduce policy rates by 50 basis points from their current levels.
RRR is the proportion of current deposits that banks need to keep with the central bank against the sum they can loan out to borrowers.
Monetary authorities already reduced the operational tool by a cumulative 400-basis-point cut to 14 percent last year.
They also implemented a combined 75-basis-point interest rate cut in May, August and September 2019. This brought overnight borrowing, lending and deposit rates to 4 percent, 4.50 percent, and 3.50 percent, respectively.
Ante also said the third growth driver for the Philippine economy this year is corporate earnings, which he estimated would expand by 12 percent.
“The growth will be led by cyclical sectors like banking and property,” he added.
Peso global technology fund
Also during the briefing, InLife launched its newest account to its fund portfolio. Called the Peso Global Technology Fund, it is the first of its kind in the country’s insurance industry.
The fund seeks to achieve long-term capital appreciation by investing majority of its assets in a fund whose underlying investment is exposed to equity securities of technology companies throughout the world.
“Our world today is dominated by technology and will continue to be so in the foreseeable future. We believe this is an opportune time to invest in global technology, because the sector offers a steady stream of solid growth,” InLife President and Chief Executive Officer Mona Lisa de la Cruz said.
According to her, while the fund takes advantage of the global market, clients do not need to buy dollars to be able to opt in because it is peso-denominated.
The fund would be available on January 28 through InLife’s variable universal life products.