Manila, Philippines – Sun Life Investment Management & Trust Corporation (SLIMTC) President Michael Gerald Enriquez has projected that the Philippine economy will accelerate to 6-6.25% next year, buoyed by a more favorable interest rate environment and decreasing economic uncertainty.

In an interview with the Philippine News Agency on Tuesday, Enriquez said, "We expect better interest rates, higher consumer spending, and government spending to drive domestic growth."

He forecast this year's gross domestic product (GDP) growth at 5.6%, lower than the government's projection of 6-7%.

The Philippines’ GDP grew by 5.2% in the third quarter, bringing the average for the first three quarters to 5.8%.

However, he noted that spending is expected to increase as both the Philippines and the United States lower interest rates. Enriquez forecasted that the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve will cut their benchmark rates by 100 basis points next year, although he expects the Fed to be more aggressive.

The current BSP overnight reverse repurchase rate stands at 6%. The Monetary Board (MB), the BSP's policy-making body, has cut its benchmark rate by a total of 50 basis points this year, and BSP Governor Eli Remolona has been open to further cuts in the overnight reverse repurchase rate in the fourth quarter.

Meanwhile, the decline in interest rates is expected to positively impact SLIMTC’s future business. Enriquez said, "As interest rates decline, investors will seek riskier assets such as stocks of listed companies where SLIMTC invests."

Enriquez noted that SLIMTC's assets under management (AUM) have significantly grown since it started operations in 2021.

He attributed this year's performance to the impact of high interest rates and uncertainty due to the US elections. "However, inflation is expected to decline, and uncertainty in the US has eased. We can expect better performance in 2025," he added.

In October, the consumer price index (CPI) rose to 2.3% from 1.9% the previous month, driven by the acceleration in food and non-alcoholic beverage prices. The latest figure is within the central bank's 2-2.8% target range.

Despite the uptick, the average inflation for January to October this year was 3.3%, within the government’s 2-4% target range.

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