The Philippine economy will likely grow by more than 6 percent this year while inflation is expected to remain within the target range, an investment management firm and a UK-based bank said.

In a briefing in Makati City on Friday, Sun Life Investment Management and Trust Corp. Chief Investment Officer Ritchie Teo projected the Philippine economy to grow by 6.2 percent this year from 5.6 percent in 2024.

Consumption will recover this year on the back of easing inflation, Teo said.

"The Philippines is still very much consumption-driven. So, with inflation rates growing lower, we think that consumption will be rebounding for this year. So that's the main driver still," he said.

Standard Chartered economist and foreign exchange analyst for Asia Jonathan Koh meanwhile, forecast Philippine economic growth to settle at 6 percent.

"(This is) at the lower bound of the government's 6 (percent) to 8 percent forecast range. So, it's below potential but it's still one of the fastest-growing economies in the region," he said in a separate briefing in Makati City.

Koh also believed that easing inflation would help boost consumer spending.

"You have remittances, that is probably going to be quite stable. That is something that is probably going to be supportive for household consumption," he said.

Inflation

Teo and Koh, meanwhile, expect inflation to settle at an average of 3.1 percent this year, well within the Bangko Sentral ng Pilipinas' (BSP) 2 percent to 4 percent target range.

Headline inflation settled at 2.9 percent in January.

February inflation data will be released on March 5 but the BSP expects inflation to settle within the 2.2 percent to 3 percent range.

According to Teo and Koh, easing inflation gives the BSP room to further reduce policy rates this year.

"Because of low inflation, we expect BSP to cut rates this year two to three times," Teo said, adding that the BSP would likely start cutting rates as soon as its next meeting this April.

Koh, meanwhile, noted that the BSP would also likely reduce rates by another 75 basis points this year.

"If you have a relatively somewhat stable growth, and you have inflation relatively benign, we actually think that there's room for further easing," he said.

"At the moment, from our base case, we are looking at June as the first rate cut, and then in August, and then one in Q4 (fourth quarter)."

PNA PHOTO