A continuous re-opening and bouncing back of businesses can be expected for the rest of 2023, but there are reasons to be cautious at the same time. This can summarize the economic outlook released by Sun Life Investment Management and Trust Corp (SLIMTC).
In a virtual briefing for market outlook on May 31 for the second half of the year, the investment unit of giant insurer Sun Life Philippines warned that economic growth may possibly continue to slow down compared to the digits in the same period last year.
“Our economists are leaning toward a slightly slower growth,” said SLIMTC President and Chief Investment Officer Mike Enriquez. “The projected slower GDP (gross domestic product) growth at 5.35% may be mainly due to base effects. Consumer growth could remain very robust, especially for non-food spending.”
The GDP forecast of 5.35% for the entire 2023 would be lower when compared to the actual 7.6% GDP growth in 2022, an election year when local spendings usually rise. GDP in the first quarter of 2023 was at 6.4%. Enriquez also cited external risks for the slowdown, particularly pertaining to fears of potential global recessions.
Enriquez underlined a possible recession in the US economy, though it may come as “not too severe.” But he warned that even a mild recession could impact the Philippine economy especially as it could impact the country’s exports.
National inflation is forecast to stabilize for the rest of the year. SLIMTC projects the consumer price index (CPI) to average 5% this year. That compares higher than the official target of Bangko Sentral ng Pilipinas (BSP) at about 2% to 4%. The average inflation rate in the country rose to 5.8% in 2022, from 3.9% in 2021.
SLIMTC keeps a bullish outlook for sectors like mall operators, restaurants, and loan providers. Services and products that were severely affected in the past years by the pandemic are expected to bounce back throughout the rest of the year.
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