The economy is projected to grow by 6.3 percent next year, driven by easing inflation and increased business activity, according to an analysis released on Wednesday by the financial services firm Unicapital Group.

“We are confident that there are opportunities for the Philippines despite the risks.

We have seen similar circumstances in the past but with the government stepping up to ensure that measures are in place to boost the equity market, everything will fall into place and yield positive results,” Unicapital Group president and CEO Jaime Martirez said.

Unicapital’s forecast is slightly lower than the 6.5 to 7.5-percent target announced by the Development Budget Coordination Committee in June and before Donald Trump won the US presidential election.

Unicapital’s outlook, however, is better than the 6.1-percent projection of the International Monetary Fund.

Despite global inflationary risks stemming from Trump’s anticipated protectionist policies, Unicapital expects continued strong household consumption in the Philippines. The firm also projected that inflation next year could average 3.1 percent, staying within the Bangko Sentral ng Pilipinas’ target range of 3 to 4 percent.

Trump, who will be inaugurated on 20 January next year, has promised to impose a 10 to 20-percent tariffs on all imports and a 60 to 100-percent tariffs on Chinese goods. Economists have warned that exporters to the US are likely to pass these costs onto consumers.

Trump in his first term from 2016 to 2020 had banned Chinese imports and firms on claims of espionage and intellectual theft from American businesses.

Unicapital said the Philippines’ overall inflation will be tempered by possibly cheaper oil prices due to “potential trade frictions leading to increased US production but weakened demand.”

According to the International Energy Agency, global oil demand could weaken to 950,000 barrels per day in 2025 from 2.1 million barrels per day in 2023 amid the persisting sluggish economy of China, the world’s second-biggest economy and manufacturing powerhouse.

Due to low inflation, Unicapital said the Bangko Sentral ng Pilipinas might continue easing its policy rate strategically, spurring higher consumption by households and firms.

As a result, the financial firm said company earnings could increase toward a better local bourse index with 14-percent growth next year to 8,000 from its 7,000 estimate for this year.

Real estate rebound

As banks offer lower interest rates, Unicapital said more consumers might be enticed to purchase homes, raising sales next year by 9 percent.

“Unicapital forecasts inventory levels to decline from 12 months to 11 months of sales as demand recovers and supply slows, as developers take a more cautious stance and temper new launches,” it said.

In terms of office space, the financial firm anticipates a moderate decline in the vacancy rate from 20.5 percent as developers explore alternative markets to replace Philippine Offshore Gaming Operators.

Benefits from CREATE MORE

Unicapital views the business process outsourcing (BPO) industry as a key player to fill office space under the newly enacted Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act.

“We expect outsourcing firms to drive most office demand, especially with the CREATE MORE law allowing up to 50 percent of employees to work from home without losing tax incentives. This will