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HSBC sees Philippines remaining ‘resilient’ as growth slows to 4.4%

HSBC Holdings PLC said on Thursday that it expects Philippine growth to remain “resilient” even as it slows to 4.4% in 2023.

“We think that (the) Philippine economy will slow down but it will still be fairly resilient at around 4.4% for 2023. Of course, inflation is still going to be an issue,” HSBC Southeast Asia Chief Investment Officer James Cheo said in a virtual briefing.

Mr. Cheo added that Philippine inflation is higher compared to the rest of Southeast Asia, though the Philippines retains high growth potential due to the young working population.

“I would say that the potential growth of the Philippines is always very high, potentially because the Philippines has a young working population. Because of that, potential growth is always higher than most countries,” he said.

December inflation came in at 8.1% on Thursday, falling within the 7.8% to 8.6% forecast range given by the Bangko Sentral ng Pilipinas (BSP) last week.

December was the ninth straight month that inflation surpassed the BSP’s 2-4% target range.

HSBC’s market picks Thailand and Indonesia recorded December inflation of 5.51% and 5.89% respectively.

Mr. Cheo said that high inflation will result in more rate hikes from the central bank which is why HSBC has a neutral view on the Philippines as an investment destination.

“As of now, given where valuations are, we have kind of a neutral view for the Philippines, given that we don’t see much kind of significant upside or catalyst in that sense,” he said.

Mr. Cheo said that banks weighted towards consumption and infrastructure will be more resilient as those factors drove the Philippine economy last year.

“I think the Philippine economy very much last year was driven by consumption and infrastructure spending and I think those factors would still be fairly robust,” he said. — Aaron Michael C. Sy

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