Citi, a leading global bank and the largest foreign bank in the country, retains a positive outlook on the Philippines amid a challenging year ahead for the global economy.
“We have seen a dynamic transition in the global economy. China has abandoned its zero-Covid strategy much faster than anticipated; the euro area has enjoyed warmer than expected winter which has helped manage ongoing energy shock; and recent US data has shown lower inflation against resilient, albeit slowing economic activity,” Joanna Chua, Head of Citi Asia Economics and Strategy, said.
Citi hosted its annual 2023 Economic Briefing for over a hundred Citi Philippines markets clients where it discussed its Global Economic Outlook and outlook for Asia and the Philippines.
“Despite these positive signs, we expect the global economy to have a tough year ahead given the lagged impact of tighter monetary and fiscal policies for most,” Chua added.
The bank also forecasts that Asia’s tightening cycle is coming to an end for most economies but could stay tight for longer.
Citi Philippines economist Nalin Chutchotitham said the country’s gross domestic product (GDP) growth is seen easing to 6.2 percent this year from last year’s 7.6 percent due to the aggressive tightening cycle by the Bangko Sentral ng Pilipinas (BSP).
“GDP growth in 2022 beat expectations, and we continue to see some upside risks to 2023 growth outlook. Inflation remains a key concern for the medium term, thus we expect the BSP to remain hawkish and hike the policy rate by 50 basis points to six percent in H1 2023,” Chutchotitham said.
Citi Philippines markets head and country treasurer Paul Favila said that the quick and decisive action taken by BSP has proven to be beneficial to the local markets.
“As evidenced by the stronger currency and flattening of the yield curve, the markets are taking comfort that the trajectory ahead is one of more stability and clarity,” Favila said.
Favila added that the aggressive rate hikes delivered by the central bank also puts its clients in a position to navigate 2023 better.
“Those that Citi supported, delivered exceptional results despite a challenging 2022. We continue to partner with our clients to ensure that they are supported with the necessary hedging, liquidity and risk management solutions. Global growth will likely continue to be uneven. Our goal is to help our clients find stable solutions to weather these conditions and allow them to focus on their core business.”
Citi Philippines markets head and country treasurer Paul Favila
According to Favila, Citi is focused on optimizing its capital while also shifting toward higher margin activities.
“Our ‘One Citi’ approach enables us to support clients across the Institutional Clients Group which includes Banking, Markets and Services. Markets provides critical services to clients in other parts of our franchise and we see an opportunity to get more out of these linkages,” Favila said.
