HSBC bullish on Philippine economy

British banking giant HSBC remains optimistic with the Philippines’ growth story, thanks to the simultaneous easing of the government’s monetary and fiscal policies.

In a briefing, HSBC managing director and head of Asia investment strategy and advisory Cheuk Wan Fan said they were expecting the Philippines’ gross domestic product growth to stay firm at 6 percent in 2019 and 6.4 percent in 2020 with fiscal spending and imports accelerating following the midterm elections.


Resilient consumer spending, recovery of remittances and election-related spending are also expected to support stable growth.

However, weak government spending and fixed investments are still major concerns.


After the central bank ended its tight monetary policy stance with a 25-basis point policy rate cut and a 200-basis point cut in the reserve requirement ration, HSBC expects the Bangko Sental ng Pilipinas to cut policy rate by another 25 basis points and to lower the reserve requirement by another 100 basis points by the fourth quarter of the year.

The potential rate cuts may reduce the relatively high carry buffer of the peso. Hence, HSBC expects the exchange rate to hit P54 to a dollar by the end of the year “given the likely compression of the yield premium and rewidening of the current account deficit.”

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