PHILIPPINE DAILY INQUIRER - March 10, 2009

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RP seen avoiding recession this year

British banking giant HSBC expects the Philippine economy to grow by about two percent this year and thereby avoiding the recession being suffered by western economies.

The foreign bank’s top representatives in the Philippines are also upbeat on opportunities on both retail and wholesale banking business in the country, despite a lingering global financial turmoil.

Personal finance business is likewise expected to continue growing in the Philippines and the bank has brought in Ron Logan as new head of this segment. Logan headed the same business for HSBC in Vietnam and was CEO of HSBC’s joint venture with Bank of Communications in China.

The new executive said HSBC’s consumer lending would continue to grow, albeit at a single-digit pace or slower than the 15-percent rise seen in previous years. “But that’s still positive. We don’t see a recession. We’ll still see a growth of more than five percent.”

Logan noted that remittances from overseas workers were continuing, the government’s budget deficit is under control and foreign exchange reserves at an all time high. “We’re not seeing a reduction in infrastructure [spending] and there’s a lot of agricultural demand.”

By the second half of this year, Logan added that the country would benefit from fresh spending ahead of the presidential elections, which could be its own internal stimulus.

HSBC, active in local investment banking apart from its personal finance services, expects a heavy pipeline of local fund-raising activities within the next three months, the bank’s country manager Mark Watkinson said in a press briefing yesterday.

“Definitely, the offshore market is more challenging now,” he said, noting that local issuers would thus likely tap the domestic markets.

As to whether there would likely be a crowding out among local borrowers, Watkinson said: “You’ve got to get your timing right. If you go to the market, you’ve got to be conscious who else is issuing at the same time you are. If you issue at the wrong time, at the wrong price, nobody’s going to take your bond.”