July 05, 2022
Economic managers of the Marcos Jr. administration would likely temper the growth targets set by the Duterte government as boiling inflation spoils the country’s economic mood. Speaking to reporters on Monday, Socioeconomic Planning Secretary Arsenio Balisacan said revisions to the government’s macroeconomic targets are likely when the Development and Budget Coordination Committee meets again on Friday. This, as the 7-8% gross domestic product (GDP) growth target set by the previous administration for this year has become more challenging to hit by the day amid an uncomfortably high inflation that’s threatening to choke consumption anew.
The Department of Trade and Industry will continue efforts to get the Regional Comprehensive Economic Partnership (RCEP) ratified under the leadership of its new secretary Alfredo Pascual. "We will continue to push for the immediate ratification of the RCEP and other trade agreements because as you may know, the Philippines has the least number among the ASEAN countries that have signed FTAs (free trade agreements) with other countries," said Pascual during the turnover ceremony of DTI's secretaryship, which was held Thursday but only aired Friday. The members of the Association of Southeast Asian Nations (ASEAN) are part of the RCEP, which is seen to make importation and exportation easier for member-states. China, Japan, Australia, South Korea, and New Zealand are also part of the agreement. Former President Rodrigo Duterte ratified the RCEP in September 2021, but it failed to hurdle the Senate in the 18th Congress.
Socioeconomic planning Secretary Arsenio Balisacan yesterday said expanding by seven to eight percent this year might be a challenge considering the impact of external developments. However, growing six percent and above would still allow the Philippines to be one of the fastest growing economies in the region. Arsenio Balisacan, National Economic and Development Authority (NEDA) secretary, said that the interagency Development Budget Coordination Committee (DBCC) under the new administration will meet for the first time on Friday to discuss the macroeconomic assumptions.
Metro Manila (CNN Philippines, July 1) — More foreign portfolio investments exited the country in May, a reversal of the entry observed the prior month, said the Bangko Sentral ng Pilipinas on Friday. Gross outflows of these investments, also known as "hot money" because of how quickly they enter and leave a country, amounted to $1.23 billion during the period. Gross inflows, meanwhile, stood at $965.62 million. These yielded $270.42 million in net outflows for the period, swinging from the $1.35 billion net inflows in April. This figure is also worse than the $416.74 million net inflows in May last year. Gross inflows or registered investments sank 55.7% month-on-month and 33.8% annually according to the BSP.
An official of the European Chamber of Commerce of the Philippines-Southern Mindanao Business Council (ECCP-SMBC) lauded Mayor Sebastian “Baste” Duterte’s direction to work closely with the business sector as well as for pushing for the digitalization of public transactions. “We welcome the statement of Mayor Sebastian Duterte to continue working with the business sector on improving further the gains made on the implementation of the “Ease of Doing Business Act”. Much has to be done in processing business permits to make these seamless and efficient. Foremost is the computerization of the entire process. This should bring Davao City at par not only with Manila or Cebu but closer to what we see in our neighbors like Singapore or Kuala Lumpur,” said Tony Peralta, chairman of ECCP-SMBC.
The Philippine Statistics Authority reported Tuesday that inflation hit 6.1% in June from 5.4% in May, with food and transport costs leading the increase in commodity prices. The recent pace zoomed past 3.7% in the same month last year. It is also within the 5.7-6.5% range pegged by the Bangko Sentral ng Pilipinas for June. June’s figure brings average inflation for the first half of 2022 to 4.4%, still above the central bank’s 2-4% goalposts for 2022.
BUSINESS SENTIMENT worsened for the next 12 months, with consumers less likely to spend amid rising oil and food prices, according to the Philippine central bank. The Bangko Sentral ng Pilipinas (BSP) confidence index fell to 59.9% from 69.8%, according to the results of its Business Expectations Survey. “The less upbeat business outlook of most of the regions was due to perceived uncertainties brought about by the government transition to a new administration, seasonal decline in production during the rainy season and expectation of higher inflation due to rising fuel prices,” according to the report.
FILIPINOS’ savings have been significantly reduced in the past two years of the pandemic, according to data released by the Philippine Statistics Authority (PSA). Based on the “Consolidated Accounts,” the PSA said the country’s total Gross Savings reached P3.88 trillion, a contraction of 12.4 percent from the previous year’s P4.43 trillion. Compared to pre-pandemic levels, BusinessMirror calculated that total gross savings contracted 36.91 percent from the P6.15 trillion in 2019. “The ‘Consolidated Accounts’ presents a summary of transactions and relationships among the various flows of the economy. Included in this report are production, consumption, income, gross accumulation and economic transactions with the rest of the world,” the PSA said.
The Management Association of the Philippines (MAP) has urged the Marcos administration to prioritize education, health care and agriculture to help the country recover fast from the COVID-19 pandemic that spawned twin public health and economic crises. In a statement on Monday, the influential private sector group enumerated key policy recommendations with the aim of “achieving and sustaining a dynamic economy with widest participation of and benefits for Filipinos spanning all socioeconomic classes, economic sectors, geographic areas and ethnic affiliations.” For the education sector, MAP raised the need to craft a road map addressing the learning crisis in the country. This should be based on international best practices, include foundational reforms and focus on lifelong learning and upskilling of educators, it explained.
The Information Technology Business Process Association of the Philippines (IBPAP) sees the potential to add another million jobs in six years, according to its president and chief executive officer Jack Madrid. Madrid told Tech Ka Muna on Oneph over the weekend the IT-business process management (IT-BPM) industry can increase to 2.5 million jobs in the next six years from 1.5 million at the end 2021. The industry added 145,000 jobs last year despite the pandemic. Based on surveys conducted by the group, as much as 90 percent of their employees prefer the hybrid setup, prompting the industry to let as much as 70 percent of their staff work from home, according to Madrid. Madrid highlighted how the IT-BPM industry has contributed to the job generation in the countryside. “During the pandemic, almost 30 percent of our workforce moved to the countryside and this is a good thing (because) there’s a lot of talent in the provinces. We have a lot of good schools in the provinces.
The first half of this year is the worst first half for the Philippine peso since 2008. With the BSP maintaining its dovish posture in contrast to an aggressively hawkish Fed, the peso plunged 7.8 percent in the first six months of this year. For the month of June alone, the peso weakened by 4.9 percent. The decline continued last Friday as the peso dropped to as much as 55.31 intraday before closing at 55.09, its lowest point against the US dollar since November 2005. The Fed raised interest rates by 75 basis-points last month, its most aggressive monetary tightening since the 1980s. It signaled another 75 and 50 basis-point hikes in the subsequent two meetings. On the other hand, the BSP had signaled a more gradual approach, hiking policy rates by 25 basis-points each in May and June. Moreover, the BSP gave dovish forward guidance of 25 basis-point hikes in August and succeeding monetary board meetings. Many analysts believe that the BSP is lagging the Fed in raising rates.
Loans extended by Philippine banks to micro, small, and medium enterprises (MSMEs) remained almost unchanged at P446.99 billion in the first quarter from P448.26 billion in the same period last year, remaining below the mandated 10 percent threshold. Data from the Bangko Sentral ng Pilipinas (BSP) showed the industry’s overall compliance ratio of 5.11 percent as of end-March remained below the required 10 percent under Republic Act 6977, as amended by RA 8289 and RA 9501 otherwise known as the Magna Carta for SMEs. The law mandates banks to allot eight percent of their total loan portfolio for micro and small enterprises and two percent for medium enterprises.
The Philippine Competition Commission (PCC) is expected to review more deals and to reach a higher number of transaction values this year as it resumes review of mergers and acquisitions (M&As) under lower and adjusted thresholds. This as the PCC reported it P4.55 trillion worth of M&As in 2021. The PCC resumes motu proprio review of M&As that can possibly be problematic when the two-year moratorium under the Bayanihan to Recover as One Act (Bayanihan 2) expires in September. The merger notification thresholds of P50 billion for the size of person and size of transaction remain in force under Bayanihan 2 enacted by Congress in 2020. Some of the biggest M&A notifications in 2021 include two real estate deals valued at P110 billion; one transaction in electricity, gas, steam and air conditioning supply, P95 billion and; another one in manufacturing, P8.56 billion.
Subsidies disbursed to government-owned and -controlled corporations in the first five months of the year posted a 59.6 percent decline versus its year ago level, data released by the Bureau of the Treasury (BTr) showed. According to data posted on the BTr website, subsidies from January to May 2022 totaled to P32.3 billion, down from the P79.94 billion released in the same period last year. The lion’s share of the subsidies released to state-run firms, amounting to P15.26 billion, went to the National Irrigation Administration (NIA), which is responsible for irrigation development and management. Also among the billionaire recipients are the National Food Authority with P3.24 billion, National Housing Authority with P3.19 billion and the Bases Conversion and Development Authority with P2.17 billion. In May alone, subsidies amounted to P7.91 billion, lower by 82.31 percent versus the P44.69 billion posted at the same time in 2021.
Oil retailers cut their prices after four consecutive weeks of increases on the back of uncertainties over the output plans of the Organization of the Petroleum Exporting Countries (OPEC) and its allies. According to the Department of Energy (DOE), as of June 28, the latest average Manila price per liter of gasoline (RON95) stood at P86.30, diesel at P90.70 and kerosene at P93.87. Caltex and Seaoil cut per liter prices by P3 on diesel and P3.40 on kerosene. PTT, Clean Fuel and Phoenix Petroleum adjusted per liter prices downward by P3 on diesel. No price movements were made on gasoline products. The DOE said as of June 28, year-to-date adjustments of petroleum products stood at a net increase of P30 per liter for gasoline, P45.90 per liter for diesel and P39.75 per liter for kerosene.
Share prices ended higher yesterday on bargain-hunting. The peso was also up. Meanwhile, the Bureau of the Treasury (BTr) has fully awarded bids for the treasury bills auctioned yesterday even as rates rose across all tenors. The auction was 2.2 times oversubscribed with total tenders reaching P32.8 billion. With its decision, the BTr fully awarded the program of P15 billion. “Rates sustained upward adjustments with inflation forecast from BSP (Bangko Sentral ng Pilipinas) exceeding six percent,” Rosalia de Leon, national treasurer told reporters. “Market (is) seeing BSP delivering harder rate punch to quash inflation,” she added. De Leon said the rates are aligned with those in the secondary market. “There have been repricing already as secondary levels show following guidance from the BSP governor on inflation path,” de Leon said. The 91-, 182- and 364-day treasury bills fetched average rates of 1.908 percent, 2.608 percent and 2.811 percent, respectively.