Philippines among bright spots amid headwinds, says Citi

MANILA, Philippines — The Philippines remains among the bright spots in the world despite headwinds brought about by the elevated inflation and rising interest rates, according to US banking giant Citi.

Amol Gupte, head of South Asia and ASEAN at Citi, said in an interview that the Philippines may post a strong economic growth over the next few years after recovering from the impact of the global health crisis.

“I am excited about this geography because ASEAN and the Philippines are among the bright spots in the world. We have more than 200 years of experience helping our clients meet the world’s toughest challenges and embrace its greatest opportunities,” Gupte told The STAR.

The Philippines managed to sustain its strong economic rebound, with a gross domestic product (GDP) growth of 7.6 percent last year after exiting the pandemic-induced recession with a 5.7-percent expansion in 2021.

The country slipped into recession with a GDP contraction of 9.6 percent in 2020 as the economy stalled due to strict COVID-19 quarantine and lockdown protocols.

“We believe growth will be in the six- to 6.1-percent range over the next two years,” Gupte said.

Due to economic headwinds, the Cabinet-level Development Budget Coordination Committee (DBCC) penned a lower GDP growth of between six and seven percent this year before improving to a range of 6.5 to eight percent from 2024 to 2028.

“In ASEAN, we’ve had to deal with some global issues that has also affected us here. You’ve got the Russia-Ukraine war, you’ve got geopolitics, you’ve got inflation, and high rates. But these are well-managed countries. It’s a very young population as median age is below 30 and in the Philippines it’s more like 24 years old,” he said.

Gupte said that geopolitics in the world continue to get complicated prompting a “rewiring” of the supply chain that is currently heavily dependent on China.

“We see tremendous interest (in ASEAN) and the post COVID outcome here is bullish. And as I’ve said, it’s a bright spot in the world. So, we expect great growth and we are investing heavily in this region,” Gupte told The STAR.

Through its vast global network and on-the-ground expertise, he explained that Citi could connect the dots, anticipate change, and understand the needs of clients and customers in ways that other banks simply could not.

“And all our clients are reviewing their supply chains and the Philippines sits beautifully in that spot,” Gupte said.

Likewise, inflation is also seen easing to within the two to four percent target range of the Bangko Sentral ng Pilipinas (BSP) toward the end of the year amid aggressive tightening cycle by monetary authorities.

The BSP Monetary Board has so far raised key policy rates by 425 basis points, bringing the benchmark interest rate to a 16-year high of 6.25 percent from an all-time low of two percent, to tame inflation and stabilize the peso.

This helped cool inflation to an eight-month low of 6.6 percent in April from 7.6. percent in March, bringing the average to 7.9 percent in the first four months of the year, but still above the two to four percent target range.

He added that Citi has an unmatched global footprint and understanding of local markets that clients could leverage as it facilitates over $4 trillion in financial flows every day and serves over 100 million customers and over 13,000 institutional clients, including 90 percent of global Fortune 500 companies.

“Our new CCO Paul Favila is a Filipino and a 30-year Citi veteran. We feel like we belong here. It’s a local bank, and we see that in 95 countries. We are excited and focused on continuing to serve our institutional clients in the Philippines, which we have been doing for the past 120 years,” Gupte said.

For first three months of 2023, Citigroup reported a 12-percent increase in revenues to $21.4 billion, while net income grew by seven percent to $4.6 billion.

Asia performed well as Institutional Clients Group revenues were up six percent to $2.4 billion and net income increased by eight percent to $842 million.