HSBC remains bullish on RP

London-based banking giant HSBC remains optimistic the Philippine economy will continue to grow at a fast pace  next year, a top executive said yesterday.

HSBC Philippines chief executive officer Mark Watkinson said he expects the economy to expand as fast or faster than the 2007 performance. After nine months into 2007, the Philippine economy grew a robust 7.1 percent, its strongest in two decades.

He said among the sectors the bank sees as a major contributor to growth is in the tourism industry, although the business process outsourcing (BPO) sector will also continue to contribute, albeit in a limited scale.

“Tourism is a better deal than BPOs as it affects a wider spectrum of the population,” the HSBC official said. HSBC operates three BPO centers employing nearly 10,000 individuals.

While BPOs employ a large number of individuals, these are mainly middle-class in origin whose parents are most likely well-placed. Most of the English-speaking individuals working in BPOs are those who were educated in schools catering to middle-level families.

But the tourism industry involves the full spectrum of the population from the few wealthy down to the large number of the low-income segment.

Thus, Watkinson said the tourism industry is more sustainable and covers a wide geographic area.

However, he said that the bank has two main concerns: high oil prices in the world market and the  strong peso.

High oil prices have a dampening effect on industry as well as households, while a strong peso immediately lowers the value of earnings of overseas Filipino workers (OFWs) and migrant Filipinos sent to beneficiaries in the Philippines.

These, in turn, result in lower consumption spending by the beneficiaries which has been fueling the Philippine economy, especially the property market.

A minor concern is how much infrastructure spending by the public sector has been completed, and how much of these are beyond the major cities.

“Will  public and private sector investments in infrastructure, which started in 2006, be beneficial in 2008 or in the immediate future,” Watkinson said.

HSBC operates eight commercial branches and more than 11 thrift bank branches in the Philippines. It will open five thrift bank branches within the next 12 months.