MANILA - Several economists and analysts said the Philippines can grow 6 percent this year amid continued revenge spending, easing inflation and the expected interest rate cuts in the latter half of the year.

The forecast is lower than the government target of 6.5 to 7.5 percent for 2024, as the economists noted the possible impact of external factors such as geopolitical issues, and the slowdown in China, among others.

Victor Abola, an economist from the University of Asia and the Pacific, noted the improvement in the country's employment figures.

Higher employment means more people will have money to spend, Abola told reporters at the First Metro Investment Corporation’s economic and capital markets briefing.

• Strong labor market seen lifting PH economy in 2024, but rise inflation poses risk

Abola also said that while consumer spending slowed down last year due to inflation, spending is expected to rise in 2024 as inflation eases.

“Revenge spending is not yet over. We’ve just seen the beginning of it," Abola said.

The government is anticipating that inflation will settle within the government's 2 to 4 percent range within the year.

"If you ask the hotels and resorts outside tourist destinations, it’s very difficult to book,” Abola added.

As inflation eases, the Bangko Sentral ng Pilipinas will also have room to for at least two interest rate cuts this year, he said.

A 25-basis point cut is likely to be implemented in June, he said adding that the Monetary Board is also likely to mirror any action by the US Federal Reserve.

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Daniel Camacho, EVP & Head of Investment Banking at First Metro agreed with Abola saying there could be "a reduction of 75 to 125 basis points."

"We see a softening of rates as inflationary pressure eases. We do not see a cut in BSP rates in the first half, but possibly 1 or 2 in the second half of the year.”

In the capital markets, Camacho said he also expects a better year following what he described as a volatile 2023 for the stock market. He said there were only 3 initial public offerings in 2023 and only P17 billion worth of equity capital raised, but 2024 will be different.

“We expect issuers to revisit their fundraising plans and tap the capital market in the second or third quarter of the year. We are confident volumes both on the debt and equity side will easily surpass that of 2023,” said Camacho.

Cristina Ulang, FVP & Head of Research at First Metro, meanwhile, added that she expects the Philippine Stock Exchange index to rise this year.

“Our forecast is 7,000 to 7,500 this year. That is supported by earnings growth of 11 percent,” she said.

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