Japan’s MUFG still bullish on PH growth

MANILA  -Mitsubishi UFJ Financial Group (MUFG), Japan’s largest bank, still sees strong economic growth in the Philippines despite rising borrowing costs that could crimp consumption.

While he did not give any figures, Takeshi Hashida, country head of MUFG in Manila, said the bank “feels strong potential” for the Philippine economy mainly because of its young population.

“We will continue to partner and grow with Filipino companies, as well as attract more global corporates, including Japanese companies, to invest in this country,” Hashida told a press conference on Friday.

The Philippine economy expanded 4.3 percent year-on-year in the second quarter, a sluggish pace compared to the 6.4 percent growth recorded in the first quarter, as surging inflation and rising interest rates meant to tame high consumer prices started to weigh on consumption, a major growth driver.

READ: PH GDP growth slowed to 4.3% in Q2 2023

Data showed the economy grew 5.3 percent in the first half, which means the Philippines would have to grow by at least 6.6 percent in the second half to hit the low-end of the government’s 6 to 7 percent target for 2023.

As it is, the government is still grappling with rising prices amid persistent supply issues.

That said, the Bangko Sentral ng Pilipinas (BSP) hinted at a resumption of its monetary policy tightening after inflation soared to a four-month high of 6.1 percent in September.

READ: Another rate hike possible, says BSP chief

MarieDiana Lynn Coronel-Singson, deputy country head at MUFG in Manila, said the bank’s corporate clients in the Philippines were already feeling the pinch of rising borrowing costs, which could hamper business expansion plans of many companies.

“That’s why we try to see how we can further support them. Not necessarily just in financing,” Coronel-Singson said.

For his part, Richard Yorke, head of global corporate & investment banking at MUFG in Asia-Pacific, said the bank was seeing the end of the tightening cycle in the United States, which could ease the pressure on the BSP to hike further.

But Coronel-Singson believes it remains uncertain where local yields are headed as inflation remains a major problem for the central bank.

“Historically, the BSP has somehow followed more or less how the Fed moves. But I think the BSP will have a lot of factors in the Philippines to look at,” she said.