BPI Securities: Philippine economy remains strong amid Middle east tensions

Despite heightened geopolitical tensions in the Middle East, the Philippine economy remains resilient, according to BPI Securities Corporation.

In a market report released Thursday, BPI Securities said stable inflation and improving domestic supply conditions are key factors helping to maintain investor confidence.

“Tensions between Israel and Iran undoubtedly pose risks to the global economy,” said BPI Securities president and CEO Mark Race. “As a major oil importer, the Philippines is exposed to price shocks. However, we take a measured view—year-to-date, the key inflation drivers for the early second quarter reflect moderation, particularly in food and utility costs, and easing transport prices.”

Race highlighted that improved rice supply has played a critical role in curbing food inflation. “Year-on-year rice prices are down by more than 11%, and that has a meaningful impact on overall inflation expectations for the rest of the year,” he noted.

On market performance, Race said the Philippine Stock Exchange index (PSEi) remains technically strong. “We continue to trade above the 6,300 level, with 6,500 acting as immediate resistance. Over the next two weeks, we expect the PSEi to remain within this band. However, our longer-term outlook is constructive — we maintain our year-end target of over 7,000, underpinned by projected core earnings growth of 8%,” he said.

Race added that Philippine equities continue to attract international investors. “Foreign holdings in Philippine stocks have declined in recent years, which has actually helped reduce the scale of sell-offs during periods of volatility. But more importantly, the Philippines is a consumption-driven economy with strong fundamentals. Combined with the possibility of lower interest rates, this remains a compelling proposition for select foreign funds,” he explained.