In the perspective of Citigroup, Inc. (Citi), the economy of the Philippines will grow this year by around 6%, pointing to the growth of the business process outsourcing (BPO), according to a BusinessWorld news report.
To put things in perspective, posted below is an excerpt from the news report of BusinessWorld Some parts in boldface…
CITIGROUP, INC. (Citi) expects the Philippine economy to expand by around 6% this year, partly driven by sustained growth in the business process outsourcing (BPO) sector.
“We expect the growth in 2025 to stay within the 6% handle,” Citi Asia South Head Amol Gupte said in an online briefing on Monday.
Citi’s forecast would be at the low end of the government’s 6-8% target for the year.
“The Philippines will continue to benefit from [the BPO industry] and will create a lot of jobs. On moving up the value chain on global capability centers, countries like the Philippines will play a very large role along with India,” Mr. Gupte said.
The information technology and business process management (IT-BPM) industry ended 2024 with $38 billion in export revenue, and 1.82 million full-time employees.
Under the Philippine IT-BPM Industry Roadmap, the target is to grow into a $59-billion industry and increase the full-time employee count to 2.5 million by 2028.
“So, I think it’s really important that the Philippines, as it thinks about the BPO industry, moves up the value chain so that it retains and bring more middle-office kinds of jobs beyond the voice jobs that exist in the tens of thousands,” Mr. Gupte said.
However, the rise of artificial intelligence (AI) could be a risk to the IT-BPM sector in the Philippines.
“There’s also the risk to that in terms of what AI will do to that industry and whether that will reduce jobs,” Mr. Gupte said.
Meanwhile, Citi South Asia Corporate Banking Head K Balasubramanian said sustained economic growth ensures that Philippine banks are well-positioned to continue to generate profits.
“I think the financial profile of the Filipino banks continues to be very strong, and with 6% growth I think they are well capitalized to look at the opportunities ahead,” he said.
As of end-September 2023, the Philippine banking system’s net profit rose by 6.4% to P290 billion as both net interest and non-interest income grew.
“We just saw the upgraded Philippine sovereign rating that happened in the fourth quarter of last year. And if you look at the impact of that on the Republic of Philippines, as well as the state-owned banks of the Philippines, I think that’s going to be crucially positive because we are now up to BBB+,” Mr. Balasubramanian said.
“(This) means that the ability to access international financing is going to be better and even the cost of the access is going to be better than what it was in the past.”
Let me end this post by asking you readers: What is your reaction to this recent development? Do you think Citgroup is correct about its research on the Philippine economy? Do you think the BPO industry will contribute a lot to the economic growth of the nation this year?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
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