LOWER interest rates will help the economy rebound from last year's below-target result and may allow the official growth goal to be met.
Gross domestic product (GDP) growth could "go back up from 5.6 percent last year," Ritchie Teo, Sunlife Investment Management and Trust Corp. chief investment officer, said in a briefing on Thursday, in addition to providing "better corporate earnings."
He forecast 6.0-percent growth this year, below the 6.5 to 7.5 percent targeted by the government, but said the goal "seems like it's something that's still attainable," especially if rate cuts materialize.
"Infrastructure projects are in, I think that will really help drive the government expenditure and on top of that the consumer will also be helped with those rate cuts...," he added.
"There's still some upside there, so I believe that there's really no need yet to recalibrate the government's target," Teo continued.
Amid recent improvements in inflation, he expects the Bangko Sentral ng Pilipinas (BSP) to cut by a total of 100 basis points this year and probably starting in June.
"[It is] probably good to say they will only cut when Fed (US Federal Reserve) cuts... not in April. Maybe in June or early second half," Teo said.
The BSP's policy rate currently stands at 6.5 percent, the highest since 2007, following 450 basis points of increases since May 2022 as inflation surged in the wake of Russia's invasion of Ukraine.
Consumer price growth has since returned to the 2.0- to 4.0-percent target, and the central bank's policymaking Monetary Board has opted to pause during its last three meetings.
The BSP now expects inflation to settle within target this year, earlier this month lowering its risk-adjusted 2024 inflation forecast to 3.9 percent from 4.2 percent. That for 2025 was raised to 3.5 percent from 3.4 percent.
The baseline forecast for this year was also trimmed, to 3.6 percent from 3.7 percent, while the 2025 projection was kept at 3.2 percent.
Teo expects inflation to hit 3.8 percent this year, within the BSP target.
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