Citi leaders: Political noise not slowing economic growth

Citi executives said the Marcos-Duterte rift will not affect local economic growth as the country’s economic fundamentals remain robust and promise a bigger manufacturing sector.

“Politics exist in every country. We don’t think the current events will derail the country’s economy,” Citi head for South Asia Amol Gupte said last Friday in a media briefing in Makati City.

That was his reply when asked about the impact of proposals from the House of Representatives to impeach Vice President Sara Duterte soon through a trial by the Senate.

Duterte has been accused of corruption linked to confidential funds worth over P237 million, which the Commission on Audit reported she used in her capacity as vice president and former secretary of the Department of Education.

Phl economy to grow 5.9 percent

Gupte expects the Philippine economy to grow by 5.9 percent this year from 5.6 percent last year on the back of strong employment rates and household consumption.

Investors invest for fundamental reasons

“Investors do not invest in a country because they like one political party over the other. They do it for fundamental reasons,” he said.

Gupte emphasized the vibrant services sector in the country, which expanded to 62 percent of the total labor force in January this year from 60.9 percent in the same month of 2024, according to the Philippine Statistics Authority.

The Citi banker also expects average inflation in the country to hit 2.5 percent this year which should drive more household consumption.

The forecast is near the inflation print last month at 2.1 percent and the Bangko Sentral ng Pilipinas’ minimum target of 2 percent.

Impeachment calls not surprising to foreign investors

Citi Philippines country officer and banking head Paul Favila added that the proposals for Duterte impeachment are not surprising to foreign investors, stressing that the Philippines is known as a democratic state.

“I think it’s just a reinforcement that the democratic processes in this country are working. We don’t want people to be too negative,” he said.

So far, Favila said he has observed that the Marcos administration is “not distracted” from implementing its projects and programs.

However, Gupte said the government must accelerate the upskilling of Filipinos in adopting artificial intelligence and automation technologies.

“It should upskill people so they are one step above and attract more jobs,” he said.

Bigger manufacturing sector

While the growth of Philippine manufacturing has been slower compared to its neighbors, Gupte said it is “never too late.”

He said the Philippines could be an alternative destination of foreign firms if US President Donald Trump’s high tariffs on goods from China, Canada, and Mexico lead to trade wars between these countries.

Gupte shared that countries have been rethinking diversifying their suppliers and exports outside China, which economists said will continue to see moderate economic growth until next year also due to low household consumption.

“People were saying we need to reduce concentration risk and build resiliency six or eight years ago,” he said. “There has been a lot of rewiring and foreign investments have come to ASEAN.”

Ease in tax payments, reduce energy prices

To boost investments in manufacturing, the Citi banker said the government must further improve policies on the ease of paying taxes, reduce energy prices and ramp up transportation infrastructure.