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Thursday, March 28, 2024

Economy expected to grow 5.5% – HSBC

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Hongkong and Shanghai Banking Corp., one of the world’s largest banks, said Wednesday the Philippines will continue to outperform other Asian countries, with a gross domestic product growth of 5.5 percent this year.

“The fundamentals of the economy remain strong… Even if the economy grows at 5 percent, it will remain one of the bright spots in the Asian region,” HSBC Asia-Pacific economist Joseph Incalcaterra said in a news briefing.

Incalcaterra said this year, the Philippine economy was poised to expand by 5.5 percent, lower than the government’s official target of 7 percent to 8 percent.

“If the economy grows by 5 percent, this is not a cause for concern [because of high base last year],” he said.

HSBC said in an earlier report the growth prospects for the Philippines remained bright, given the country’s indirect exposure to the Chinese economic slowdown and lower commodity prices.

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HSBC cited the Philippines along with economic powerhouse Japan as two of the countries that could be less vulnerable to external shocks.

It said the Philippines’ outlook could be better than its neighboring countries in the region, such as Malaysia and Indonesia. It said commodity weakness hurt both countries, affecting their foreign exchange reserves and current account balances.

“By being close to China, both geographically and in terms of trade linkages, the downturn in Chinese data has hit sentiment. Currencies have weakened and borrowing costs have risen, putting the sustainability of the corporate sector at risk,” HSBC said.

It said the Philippines was one of the few emerging markets that were relatively unexposed to a slowdown in Chinese growth and lower commodity prices. 

It said trade in goods played a small part in exports and so the same risks to growth did not exist.

Economic growth averaged 5.3 percent in the first half.  The government vowed to accelerate fiscal spending in the remainder of the year to boost economic growth.

The Philippine economy grew by 6.1 percent in 2014, making it one of the fastest growing markets in the region.

Meanwhile, Incalcaterra said inflation would continue to be benign this year, even if a severe El Nino phenomenon happened. “Inflation will remain within the 2 to 4 percent target range of the Bangko Sentral this year,” he said.

Inflation in the first 10 months averaged 1.5 percent, below the official target of 2 percent to 4 percent.

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