PH among top performers in 2025 Asean growth — HSBC  

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Economies from Southeast Asia will deliver robust gross domestic product (GDP) growth of 4.8 percent in 2025, with the Philippines among the top performers, major global banking and financial services player HSBC said. 

Growth by the Asean economies will surpass the 4.4 percent average regional growth of Asia, HSBC said in its latest report released on Tuesday.

James Cheo, HSBC’s chief investment officer for Southeast Asia and India under the bank’s global private banking and wealth segment, said robust domestic consumption and investment will be the main driver of growth among the top six  members of the Asean, or the Association of Southeast Asian Nations—Thailand, Singapore, Malaysia, Indonesia, Vietnam and the Philippines.

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No country-specific GDP growth figures among these economies were given on Tuesday.  

For the entire Asean group, Cheo said about 60 percent of GDP will be powered by private consumption, which should mitigate the risk of weaker exporter growth amid trade uncertainty in 2025.

Thriving BPO, consumption 

The Philippine economy, even at its slowest annual pace in more than a year in July-September 2024, grew at a still brisk 5.2 percent. 

This third-quarter performance took the economy’s year-to-date growth to 5.8 percent, below the government’s full-year target of 6 percent to 7 percent, but officials expect growth to regain momentum in the last quarter on the back of easing inflation and looser monetary policy.

“The Philippines’ economic growth in 2025 will be driven by robust domestic consumption, a thriving business process outsourcing (BPO) sector, and increasing investments in digital services,” Cheo said.

Cheo stressed the country’s unique strength in services exports, including IT (information technology) and BPO (business process outsourcing) services, provides a buffer against global trade uncertainties and tariff risks.

“Household consumption is expected to return to pre-pandemic growth rate, supported by easing inflation, a strong labor market, and increased infrastructure spending,” Cheo said.

Services exports and overseas remittances, “which remain key economic pillars, will continue to contribute significantly to economic resilience and stability in the Philippines,” he added.

Data from the Bangko Sentral ng Pilipinas (BSP) show that personal remittances from overseas Filipinos grew 2.7 percent to $3.42 billion in October 2024 from the $3.33 billion registered in October 2023.

Cumulative remittances in January-October 2024 increased by 3 percent to $31.49 billion from the $30.57 billion recorded during the same period the prior year.

Of the total, cash remittances

coursed through banks reached $3.08 billion in October 2024, higher by 2.7 percent than the $3.00 billion posted in October 2023.

Favorable policy rates 

Cheo said the country’s monetary and fiscal policies “are aligned to support growth while managing risks.”

“We forecast the BSP to cut policy rate to 5 percent in the third quarter 2025 , as it cautiously navigates external risks like potential volatility in the peso and the US Federal Reserve’s easing cycle,” Cheo said.

With inflation expected to remain within the target range of the government for last year and this year, the policymaking Monetary Board last December reduced the BSP’s Target Reverse Repurchase (RRP) Rate by another 25 basis points to 5.75 percent.

Interest rates on the overnight deposit and lending facilities were adjusted accordingly to 5.25 percent and 6.25 percent, respectively.

This was the third consecutive 25-bps rate cut made by the Monetary Board for 2024, totaling 75 bps.

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As inflation returned to the government’s target range for the first time in four years last year, BSP said there is still enough room to ease its policy stance.

AI-linked Asean exports 

“In Asean, countries with strong linkages to AI-related technology exports should enjoy the ongoing global tech upcycle. Asean economies remain the beneficiaries of shifting trade flows and supply chain reorientation driven by US trade restrictions and tariffs on China,” Cheo said.

He observed that resilient and defensive equity returns in the region share buybacks in Asia are growing at a record pace, particularly in Japan, mainland China and Hong Kong markets.

“Solid earnings growth is forecast to drive over 7 percent growth in dividends in Asia ex-Japan and 9 percent in Japan in 2025, thanks to positive progress of corporate governance reforms in Japan, China and South Korea. Dividend yields in Singapore and Indonesia at 4.2 percent; Hong Kong and Malaysia at 3.9 percent look compelling versus 1.8 percent globally,” Cheo said.

HSBC is also seeing a “promising domestic-driven opportunities in Asean and India,” riding on the secular tailwinds from young demographics, rising middle-class consumers and technology boom. 

“Within Asean, we see overweight Singapore equities as the country has a modest trade deficit against the US, making it a defensive play under tariff risks as compared to other regional peers, especially with support from its compelling dividend yield,” Cheo pointed out.

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