SUN LIFE Asset Management Company, Inc sees PHL GDP growth of 7.0% in 2020

It will be a “better, faster Philippine economy” next year according to a forecast by Sun Life Asset Management Company, Incorporated (SLAMCI) The company believes the Philippine economy is poised to get better and grow faster in 2020.

SLAMCI is the Philippine mutual fund management arm of Sun Life of Canada (Philippines), Incorporated, the country’s first and longest-standing life insurer.

“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 said. “While we can still expect challenges along the way, these should be tolerable and may be balanced by the positive developments.”

Among the factors that are expected to boost the Philippine economy next year are lower prices and accelerated government spending. "While inflation fell to a low of 0.8% in October 2019, we expect prices to slowly inch up as we foresee the year 2020 inflation at 2.4%. This figure is much lower than 2018 inflation of 5.21%” Enriquez said.

Sun Life also expects the government to go full force on capital outlays, with the administration having only two years left in its mandate.

Meanwhile, higher gross domestic product (GDP) may also be expected. According to Enriquez, Sun Life looks forward to a 2019 GDP of 5.8%, and foresees the 2020 GDP getting stronger at 7%. This is 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."

For currency, Enriquez said that a range of PHP 50.70 to PHP 52.50 to a dollar is possible. “Our year 2019 USD to PHP forecast is at 51.00, and 2020 slightly higher at 52.50," he explained.

On the equities front, while 2019 remains to be a fairly volatile year, Sun Life expects the Philippine Stock Exchange index to end at 8,600 on a best-case scenario. "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 10.40%” Enriquez said.

As for external factors that need to be considered, Enriquez said that the United States may experience a mild but temporary recession in the coming months. With the Federal Reserve on a passive QE (quantitative easing) mode he says the US Dollar 10-year bonds may re-test the recent low of 1.5%-1.7%.

"Given these possibilities, we highly encourage investors to stay the course, Enriquez said. "t 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."

DISCLAIMER: Sun Life Asset Management Company, Inc. (SLAMCI) makes no representation as to the accuracy or completeness of the information in this document This material was prepared for informational purposes only, and is not intended to provide, and should not be relied on for investment, accounting, legal or tax advice. Projections contained herein are not to be relied upon as advice or interpreted as a recommendation.

JL Santiago Aquino

A millennial lifestyle blogger from Caloocan City who adores trying new things. ✨ Email: Follow @JayL_Aquino on Instagram, Twitter, TikTok & Facebook.

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