EastWest Bank is projecting a positive outlook for the corporate sector this year, driven by expected improvements in corporate earnings, lower consumer prices, and a reduction in interest rates by the central bank. The bank’s chief investment officer, Bede Gomez, believes these factors will help ease borrowing costs and stimulate demand in various sectors, especially real estate and consumer goods.
Gomez said the corporate sector’s increased spending, combined with a boost in government expenditure due to the upcoming midterm elections, will drive economic activity. However, he noted that government spending would be front-loaded before the election ban on projects takes effect. “Lower refinancing costs will improve margins for companies, and a drop in interest rates will lead to higher demand for properties and consumer products,” he explained.
In terms of investment, Gomez identified technology, telecommunications, and power sectors—particularly real estate investment trusts (REITs) and renewable energy—as areas to watch. He also said that coal would remain a significant player in the energy sector as it remains the most affordable source of power, despite growing interest in renewable energy.
Looking forward, Gomez expects fintech firms like GCash and Maya to continue disrupting the market, with GCash projected to surpass the earnings of its parent company, Globe Telecom, by generating up to P12 billion in 2024. He also noted that the funds from GCash’s IPO would largely be directed toward expanding its digital lending services, which he believes will be a major game-changer.
Despite this optimistic outlook, EastWest Bank remains cautious about external risks, including geopolitical tensions and economic slowdowns in both China and the United States. Gomez emphasized the uncertainty surrounding a potential U.S. recession and its implications for global markets, making the bank’s outlook more measured.
The bank’s forecast suggests that the next few months could see a vibrant corporate sector, buoyed by lower borrowing costs and digital innovations, but global headwinds could still pose challenges.
