HSBC expects to see Filipino consumption return to pre-pandemic growth this year as a result of easing inflation and higher employment rates.

“Services exports and overseas remittances, which remain key economic pillars, will continue to contribute significantly to economic resilience and stability in the Philippines,” James Cheo, chief investment officer for Southeast Asia and India at HSBC Global Private Banking and Wealth, said.

Specifically, he said the business process outsourcing industry will continue to expand, reflecting inflows of investments in digital technology from local and foreign governments, institutions and firms.

“In ASEAN, countries with strong linkages to artificial intelligence-related exports should enjoy the ongoing global tech upcycle,” Cheo said.

Gov’t spending infra sustained

He added that sustained government spending on other infrastructure for a total of five to six percent of gross domestic product will further generate jobs.

With more Filipinos earning income amid possible higher tariffs on goods exported to the US, he said Asian businesses will likely boost cheaper products within the region.

“The tariff overhang also adds momentum to Asia’s intra-regional trade and investments, offering growth opportunities to high-end manufacturing leaders with global competitiveness,” Cheuk Wan Fan, chief investment officer for Asia at HSBC Global Private Banking and Wealth, said.

Hiked tariffs passed on to consumers

Reelected US President Donald Trump promised to raise tariffs on all US imports by at least 10 percent, which economists said would be passed to consumers.

With higher domestic consumption, Cheo highly recommends investors to grow funds through stocks as companies earn more profits, especially those engaged in automation and modern medicines.

HSBC investment officers project Asian firms’ return on equity to grow by 12 percent this year.

The outlook excludes an analysis of Japan.

“We find promising domestic-driven opportunities in India and ASEAN, riding on the secular tailwinds from young demographics, rising middle-class consumers, and technology boom,” Cheo said.

Meanwhile, HSBC investment officers gave a neutral stance on bonds as most central banks are seen to cut rates to spur higher consumption and ultimately economic growth amid manageable global inflation.

Rate cuts

Fan said central banks will also follow possible US Federal Reserve rate cuts to maintain healthy levels of foreign exchange and investments.

“To navigate increased trade uncertainty after the US elections, we focus on discovering domestic resilience and diversification opportunities in Asian equity and credit markets,” she said.

HSBC investment officers expect the Federal Reserve to ease its rate by 25 basis points each in March, June and September toward 3.5 to 3.75 percent.

Cheo projects the Philippine peso to remain resilient at P59.8 per US dollar by year-end as the greenback relatively strengthens partly due to higher investments in US industrial and technology sectors.