The economy of the Philippines will get better and grow faster in 2020, Sun Life Asset Management Company, Inc. believes. Lower prices and accelerated government spending are among the factors that are expected to boost the economy.
“After reviewing the fundamentals, we are confident that the economy is set to significantly improve in the coming year,” Sun Life chief investments officer Michael Enriquez stated. “While we can still expect challenges along the way, these should be tolerable and may be balanced by the positive developments.”
“While inflation fell to a low of 0.8 percent in October 2019, we expect prices to slowly inch up as we foresee the year 2020 inflation at 2.4 percent,” Enriquez continued. “This figure is much lower than 2018 inflation of 5.21 percent.”
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Under President Rodrigo Duterte, the current administration has only two years left in its mandate. The Philippine government will go full force on capital outlays within this period, Sun Life expects.
Moreover, higher gross domestic product may be expected. There will be a 2019 GDP of 5.8 percent and the GDP will get stronger at 7 percent in 2020 due to a combination of base-effects, the recovery of consumer spending, and a stronger government spending “following the lessons it has learned from the budget delay of 2019,” according to Enriquez.
The Sun Life chief investments officer said that for currency, a range of 50.7-52.5 pesos to a dollar is possible. He explained, “Our year-2019 US$-₱ forecast is at 51 and 2020 slightly higher at 52.5.”
Sun Life expects the Philippine Stock Exchange index to end at 8,600 on a best-case scenario on the equities front while 2019 remains to be a fairly volatile year. Enriquez said, “Our PSEi target for 2020 is at 9,460 with a price-earnings multiple of 18.2 times while we foresee the earnings to have a growth rate of 10.4 percent.”
For external factors that need to be considered, the United States may experience a mild but temporary recession in the coming months, Enriquez said. According to him, the US$ 10-year bonds may re-test the recent low of 1.5-1.7 percent with the Federal Reserve on a passive quantitative easing (QE) mode.
“Given these possibilities, we highly encourage investors to stay the course,” Enriquez said. “It is only with a long-term vision and a solid commitment to their investing journey that they can benefit from a better and faster Philippine economy in 2020.”
Matteo Guidicelli is one of the celebrity ambassadors of Sun Life Philippines. Meanwhile, here is Enriquez during a recent press conference:
CONAN Daily 