Continued growth in consumption and capital outlay also expected
- Equity and bond markets are expected to recover as interest rates stabilize and likely see rate cuts by 4Q.
Inflation is seen at a decelerating trend during the second quarter of 2023, according to a Sun Life Investment Management and Trust Corporation executive.
During the Sun Life 2H2023 Market Outlook Press Conference, Mike Enriquez, President & Chief Investment Officer of SLIMTC shared that the speed of domestic inflation is expected to decelerate to 5.0% in 2023, compared to the 4.5% prediction shared last year. The deceleration range is from a low of 3% to a high of 7%.
This shows that the deceleration in the monthly changes of the CPI (consumer price index) is more stable, with commodity prices coming off from highs. While there are weather-related risks, the early importation of rice, grains, and livestock could mitigate this.
In separate news, the Bangko Sentral ng Pilipinas said that inflation could ease below two percent by January 2024.
The other key themes that Enriquez shared during the press conference are the following:
- BSP is at an inflection point: the rate pause is expected to remain until Q4 and at which time BSP will likely look to cut rates.
- Slower GDP growth at 5.35% mainly due to base effects. We expect continued growth in consumption and capital outlay, even though a global growth slowdown is expected to dampen business and consumer sentiment.
- The US dollar-Philippine peso exchange is seen to be more stable at 55 with a range of 52-57. This, as inflation is normalizing and BSP inflection on monetary policy could even spell a mild appreciation bias towards year-end.
- Equity and bond markets are expected to recover as interest rates stabilize and likely see rate cuts by 4Q.
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About SLIMTC
Sun Life Investment Management and Trust Corporation is a trust corporation under the Sun Life of Canada company. It is duly authorized by the Bangko Sentral ng Pilipinas (BSP).
It provides multi-strategy local and global portfolio management services, delivering superior risk-adjusted returns for its clients. Its products and services include Investment Management Account, Retirement Fund Account, and Pre-Need Account./
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