Teresita Sy-Coson, Vice Chairperson of SM Investments Corp., the largest conglomerate in the Philippines, believes that the worst of inflation is not yet behind the country. In an interview with Bloomberg TV, she expressed concerns that high inflation continues to persist in the Philippines, despite some improvements in certain areas. Sy-Coson's remarks come after government data revealed a decline in inflation to a three-month low of 4.9% in October from 6.1% the previous month.
According to Sy-Coson, it will take some time before the country reaches the peak of consumer price gains. Her comments align with the recent warnings from the Philippines' central bank, Bangko Sentral ng Pilipinas (BSP), which highlighted ongoing inflationary risks arising from increased transportation costs, higher power rates, elevated oil prices, and the potential impact of a strong El Nino phenomenon.
The BSP has underscored the need to maintain sufficiently tight monetary policy settings until a sustained downtrend in inflation becomes evident. In line with this, the central bank raised the policy rate to a 16-year high in an off-cycle meeting last month.
Despite the higher interest rate environment, Sy-Coson noted that it has not led to a significant increase in debt restructuring. She expressed confidence in the overall financial health of Philippine companies and industries, stating that they "are still in good shape."
SM Investments Corp. owns several major entities, including BDO Unibank Inc., SM Prime Holdings Inc., and SM Retail Inc. Sy-Coson identified renewable energy, technology, and the health sector as areas of opportunity for the conglomerate. She emphasized that the bank has been supportive of businesses looking to expand and grow during uncertain times.
However, Sy-Coson predicted that consumer spending this year, particularly during the typically robust fourth quarter, might not exceed last year's levels, which saw an upsurge in "revenge spending." While the conglomerate reported a 30% year-on-year increase in net income for the nine months ending September, she acknowledged that growth in consumer spending may be impacted by the ongoing inflationary environment.
Overall, Sy-Coson's assessment reflects the prevailing concerns about inflation in the Philippines and the potential implications for economic growth and consumer behavior. As the country awaits a sustained decrease in inflation, business sectors continue to navigate through challenging times, strategically seeking growth opportunities to withstand the impact of rising prices.