Sun Life Philippines expects the Philippine economy to undergo a “U-shaped,” a longer type of recovery and a return to trend line growth in the next two years.

Michael Gerard D. Enriquez, Sun Life chief investments officer, said the country’s economy, as measured by its gross domestic product (GDP), may grow by 4.0 percent to 5.0 percent in 2021, a reversal of projected 8.0 percent contraction this year.

Enriquez said the economic decline in the final three-months of the year could be softer than in the previous quarter at 5.7 percent.

Sun Life’s 2020 economic projection is better than the government’s outlook of -8.5 percent to -9.5 percent, but below the Duterte administration’s target of 6.5 percent to 7.5 percent growth in 2021.

“The year 2021 has potential to be a strong recovery year, but only if a fiscal stimulus is passed early and it impacts households,” Enriquez said.

As for Bangko Sentral ng Pilipinas policy rates, Enriquez sees one more cut of 25 basis points for the coming year to further provide liquidity in the system.

While major economies have started to re-open, financial markets rebounding from their recent lows and sentiment changing from fear to fear-of-missing-out, Enriquez said that volatility would persist in the coming year.

“Although the Philippine Stock Exchange index (PSEi) rallied and trimmed its losses after vaccine news, the index remains at overbought levels and a correction is possible in the near-term,” Enriquez explained.

“We expect the PSEi to reach 8000 next year with an EPS growth of 45 percent, driven by the expected recovery of the consumer discretionary, real estate, and industrial players in the stock market,” he added.

Given these developments, Enriquez advises investors to stay committed to their financial goals.

“The economy is not where we want it to be just yet, but a recovery is in the horizon as it always is after a period of recession,” he said. “By riding the wave of volatility, investors can reap the rewards later on.”

An important step to take is knowing one’s risk profile and tolerance, as this will determine where he should invest his money in.

Sun Life Asset Management Co., Inc. (SLAMCI) offers a wide range of funds that could match various risk profiles.

For instance, those who can tolerate market fluctuations in exchange of potential high returns may opt to invest in the Sun Life Prosperity Equity Fund.

Meanwhile, those who are keen to have a steady ride throughout his investing journey can opt to invest in the Sun Life Prosperity Money Market Fund or the Sun Life Prosperity Bond Fund.

“No matter what direction an investor takes, what is important is that he commits to his financial goals and invests regularly and consistently,” Enriquez said. “Time in the market will pay off in the long run, so it is always best to stay the course.”