The Philippine economy is expected to post one of the highest growths in the Association of Southeast Asian Nations (ASEAN) this year, the HSBC Global Private Banking and the Bank of America (BofA) said.

HSBC Global Private Banking and Wealth chief investment officer for Southeast Asia and India, James Cheo, said the Philippine economy is expected to deliver one of the strongest growths in the region this year.

Cheo said economic growth would be driven by robust domestic consumption, a thriving business process outsourcing (BPO) sector, and increasing investments in digital services.

Household consumption is also expected to return to the pre-pandemic growth rate, supported by easing inflation, a strong labor market, and increased infrastructure spending.

According to Cheo, the country’s strength in services exports, including information technology and BPO services, also provides a buffer against global trade uncertainties and tariff risks.

“Services exports and overseas remittances, which remain key economic pillars, will continue to contribute significantly to economic resilience and stability in the Philippines. Monetary and fiscal policies are aligned to support growth while managing risks," he said.

He noted that the Bangko Sentral ng Pilipinas would likely reduce the policy rate to 5 percent in the third quarter of this year as it cautiously navigates external risks, such as potential volatility in the peso and the US Federal Reserve’s easing cycle.

"On the fiscal side, the government’s infrastructure agenda remains a key growth driver, supported by revenue-enhancing measures," he said.

In a separate report, BofA revised upward its Philippine economic growth forecast to 5.9 percent this year from the earlier 5.5 percent projection.

In the ASEAN-6, the economic projection for the Philippines is the second highest, next to Vietnam's 6.8 percent economic growth forecast.

The ASEAN-6 consists of Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

According to BofA, the Philippines, which is domestic-oriented, is "less vulnerable" to the impact of the possible higher tariff that will be imposed by the United States.

BofA, meanwhile, said headline inflation is expected to remain within the government's 2 percent to 4 percent target. 

PNA PHOTO