A STRONG economy, lower inflation and anticipated rate cuts will likely fuel stock market growth this year, Philstocks Financial Inc. said.

The benchmark Philippine Stock Exchange index (PSEi) was forecast to close 2024 between 6,998.71 and 7,665.26, with earnings per share increasing by 5 to 15 percent.

The main index ended last year at P6,450.04, 1.77 percent down from 2022's 6,566.39, due to local macroeconomic factors and global events.

"The robust economy is still expected to help our corporate profitability, mainly through the strengthening of their revenues," the brokerage said.

"The continuous growth of the economy is expected to lead to higher incomes on an aggregate level which, in turn, would sustain the demand for our corporate products," it added.

Philstocks' base case growth forecast for the economy is 5.6 percent, supported by a healthy labor market, lower inflation and the easing of monetary policies in the second half.

Inflation, meanwhile, will likely average within 3.8 to 4.2 percent this year, dropping from the 2023 result of 6.0 percent.

Philstocks, however, said the PSEi growth outlook may not be met if "economic growth sharply decelerates [and] inflation does not fall within or near the government's 2.0- to 4.0-percent target."

Sentiment will also be affected if the US Federal Reserve and the Bangko Sentral ng Pilipinas decide not to ease policy this year, it added.

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