SUN Life Financial-Philippines (Sun Life) sees the country’s gross domestic product (GDP) hitting 6.1 percent, lower than the 6.4-percent growth for 2018 that the company forecast last October, owing to slower consumption brought about by inflation adjustments.
Sun Life Chief Investments Officer Michael D. Enriquez made this announcement during the 2019 market outlook news conference of the Sun Life Asset Management Co. Inc. (Slamci) at the Shangri-la The Fort Hotel on Monday.
Sun Life also sees the average GDP for 2019 to hit 6.4 percent fueled by election spending for the first half of the year and sees consumption moving up again as inflation tapers off for next year, and a forecast of 7 percent for 2020.
“Next year, we expect the economy to grow at 6.4 percent, fueled by the first half midterm election spending. We expect it to fuel consumption growth which has tapered off a bit this year because of higher inflation. But next year, we are quite optimistic that consumption-led growth will start to move up again together with the aggressive stance of the government in its ‘Build, Build, Build’ program,” Enriquez said.
The Development Budget Coordination Committee (DBCC) earlier reported it sees the country’s GDP to hit around 6.5 percent to 6.9 percent by the end of 2018, which changes its earlier forecast of 7 percent to 8 percent.
Earlier, the Philippine Statistics Authority (PSA) reported that the country’s inflation level for August hit 6.4 percent which was the highest in nine years, followed by 6.7 percent in September and October this year.
This resulted to the signing of Administrative Order 13 by President Duterte which has removed nontariff barriers and streamlined procedures as a way of answering the fast pace of inflation recorded in the previous months.
Enriquez explained that average inflation for this year is seen to hit 5 percent, with 2019 inflation expected to settle at 4.1 percent due to the passage of the rice tariffication bill as well as the continuous downward trajectory of world oil prices.
“The important thing is the direction of inflation. We’re seeing inflation already slowing and in fact, probably has already peaked. This is a change from our previous forecast where we saw inflation worsening probably toward December, but because of what happened to world oil prices, it was able to help us recover inflation faster,” he added.
He also explained that the actual construction of infrastructure projects would also fuel the country’s GDP growth, but the construction of most of the major projects is seen to happen in 2020.
“The government has always been targeting 7 percent to 8 percent [GDP]; it has never been achieved. I think that is their pronouncement similar to their pronouncements on inflation of 2 percent to 4 percent,” he said.