First Metro Investment Corporation and the University of Asia and The Pacific have maintained their economic growth forecast of at least 6 percent for this year as both institutions said they’re seeing more Filipinos working even as recent inflation data are signalling stable prices of goods and services.

Based on their capital markets research for February, inflation will likely quicken at 3.2 percent in the first quarter and 3.8 percent for the entire year.

These are close to the 3.6 percent baseline inflation forecast of the Bangko Sentral ng Pilipinas for 2024 and within its target range of 2 to 4 percent.

Meanwhile, the Development Budget Coordination Committee said it iinitially expects economic growth to reach 6.5 to 7.5 percent this year.

Stable prices overall

The FMIC and the UA&P expect stable prices overall due to and “abundance” of oil supply from the Organization of the Petroleum Exporting Countries.

Crude oil prices will fall from $80 per barrel to $76.50 by December this year and $73.50 by end-2025, according to the FMIC and UA&P’s research.

The two institutions add better weather forecasts from the National Oceanic and Atmospheric Administration or NOAA indicating more food supply.

“As for rice prices, we think the El Nino phenomenon will end by May 2024 based on NOAA charts, together with assured imports from Vietnam in the first half,” their report says.

Production in other industries will also likely expand as the FMIC and the UA&P see more Filipinos employed.

“This should provide the necessary wherewithal for consumers to open their wallets in 2024, starting in the first quarter,” the groups said.

There were 1.3 million jobs added to the labor force last December, resulting in 50.5 million employed Filipinos based on data from the Philippine Statistics Authority.

Debt and equities markets

The debt market will likely see steady rates or “broadly sideways” movement until April due to slightly quicker inflation in the first half of the year.

FMIC and UA&P research shows the Bureau of the Treasury recording a slow rise in bond rates above 6.25 percent by mid-February due to the inflation downtrend.

“Investors preferred longer dated debt papers as they expected little upside amid subsiding inflation, downplayed mildly rising yields in January,” the FMIC report says.

Data from the BTr show that yields of 182-day papers grew faster by 54.3 basis points compared to 40.2 bps of the 91-day papers. Only three-year papers posted higher yields of over 10 bps.

More public investment in companies

Meanwhile, the FMIC expects more public investments in companies, enabling the Philippine Stock Exchange index or PSEi to reach 7,000 to 7,500 this year from 6,850 by mid-February.

The FMIC says the likely disinflation should drive more consumption to raise corporate earnings and support their expansion projects.

“Still, further gains require robust corporate earnings in the first quarter amid elevated interest rates. We think the PSEi will have some correction in the second quarter,” it said.

“Looking forward, we favor Holdings, Telcos, Services, Property and Consumer sectors amid growing interest among foreign investors,” FMIC continues.

FMIC and the UA&P announced the same estimate of at least 6 percent economic growth in their media conference on 11 January.

This was before the government’s announcement of a 5.6 percent economic growth for 2023 and the 2.8 percent January inflation estimate.