The economy could grow by over 6 percent this year or within the government’s target if it speeds up infrastructure development in the country, Sun Life Investment and Trust Corp., or SLIMTC, said Thursday.

“It’s still attainable. We’re on the right track, especially if we see more of those public-private partnership projects come into play,” Ritchie Teo, SLIMTC’s chief investment officer, said in the firm’s industry outlook forum.

SLIMTC expects this year a 6 percent growth in gross domestic product or GDP.

The Development Budget Coordination Committee, on the other hand, announced last December its growth forecast ranging from 6.5 to 7.5 percent.

Teo said the higher GDP growth will likely be driven by the recent aggressive efforts of the economic managers on raising government spending, such as the timely submission of expenditure plans from various agencies for budget approval.

“For the government, given the mandate to them to ramp up spending, we expect that will improve later. It already called out the underspending by some agencies. Unfortunately, the disbursements were not released,” he said.

The 5.6 percent GDP last year fell below the government’s target of at least 6 percent for the period. This reflected a 1.8 percent decline in government spending, based on the data from the Philippine Statistics Authority.

Lower interest rates

Teo said household consumption will remain a main economic growth driver this year as he expects the Bangko Sentral ng Pilipinas to start lowering its policy rate late in the second quarter.

He sees a full-year reduction of 100 basis points, which he said indicates a likely inflation downtrend.

Overall prices of goods further declined to 2.8 percent in January from 3.9 percent in December, the statistics authority reported.

These were within the BSP’s target range of 2 to 4 percent. Teo projects inflation this year will average at 3.8 percent.

Meanwhile, the BSP currently imposes a 6.5 percent policy rate or an increase of 450 basis points from the level in the first half of 2022.

However, Teo said the BSP will not lower its rate ahead of the US Federal Reserve to keep foreign investments flowing and the peso stable.

He predicts the foreign central bank will implement three to four rate cuts by mid-year.

Equities growth

Teo said the Philippine Stock Exchange index could improve to 7,200 by the end of the year as inflation slows further, allowing extra funds for investing among the public.

He said investments will be shared with smaller firms as investors look to take advantage of declining inflation and interest rates in developing economies.

“For the US, there is still some room to grow despite growing by 26 percent to 36 percent last year because of new economies, meaning the AI,” Teo said.

“With better global markets, people’s risk appetite will improve and look at the emerging markets,” he added.