THE Sun Life of Canada (Philippines), Inc. (Sun Life) said the government needs to spend aggressively following weaker-than-expected growth this year, with government agencies reluctant to spend because of the intense scrutiny of their fund usage.
“The government (needs to be) more aggressive on spending. Because one of the key factors that drove lower-than-consensus GDP was really the lack of government spending,” Michael Gerard D. Enriquez, president of Sun Life Investment Management and Trust Corp., told reporters.
Mr. Enriquez said many agencies are “quite scared because they’re very scrutinized by how they spend the money.”
Sun Life said on Thursday that it expects the economy to grow 5.6% this year, picking up to 6.2% in 2025.
The Development Budget Coordination Committee (DBCC) set an economic growth target for this year of 6-6.5% but widened the target band to 6-8% for 2025 until 2028.
Growth in government spending slowed to 5% in the third quarter from 11.9% in the prior quarter, the Philippine Statistics Authority said.
Mr. Enriquez also added that consumer spending also fell because “inflation has really eroded a lot of their purchasing power.”
Sun Life forecast inflation to average 3.3% in 2024 and 2.8% in 2025.
“We see inflation returning to more stable ranges as well as stable supply for rice in 2025. Risks are another food supply problem or commodity price spikes,” it added.
The PSA reported on Tuesday that consumer price index growth accelerated to 2.5% year on year in November from 2.3% in October. The inflation reading in November 2023 had been 4.1%.
November inflation matched the median estimate of a BusinessWorld poll of 15 analysts conducted last week.
“With inflation starting to go down and the BSP (Bangko Sentral ng Pilipinas) very supportive in lowering policy rates, we hope to revive consumer spending,” he said.
When asked whether the 8% high end of the government growth target band can be achieved, he said: “They need to really spend on the critical infrastructure projects that they’ve identified.”
Mr. Enriquez also said manufacturing and the business process outsourcing industries to benefit from the Philippine and Canadian governments’ exploratory talks for a possible free trade agreement.
He also noted that the BPO industry flourished during the first term of President-elect Donald J. Trump.
Sun Life Philippines currently manages the equivalent of 6.2 billion Canadian dollars worth of assets, Benedict C. Sison, chief executive officer at Sun Life Philippines, said.
“We’re targeting, once we finish with the consolidation of all the assets, probably closer to 8 billion Canadian in assets under management,” Mr. Sison said. — Aubrey Rose A. Inosante