ECCP at Work

ECCP@Work Featured Articles | July 8, 2022

July 08, 2022

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ECCP at Work

PH unemployment tally slightly rises to 2.93 million in May

Around 2.93 million Filipinos were unemployed in May, sliding from 2.76 million the previous month, the Philippine Statistics Authority said. The national joblessness rate stood at 6% during the period, up from 5.7% in April. The PSA also reported an unemployment rate of 5.9% for men, up two percentage points from the month before. For women, the rate rose to 6% in May from 5.7% in April. Agriculture and forestry shed the most jobs month-on-month at 733,000 — followed by public administration and defense; arts, entertainment, and recreation; education; and professional, scientific, and technical activities.

POSSIBLY NOT THE PEAK YET: June inflation breaches 6% mark

Consumer prices continued to accelerate in June, breaching the 6 percent mark, brought about by the higher annual growth rate in the indices for food and non-alcoholic beverages and transportation. The Philippine Statistics Authority yesterday said inflation hit 6.1 percent in June, the highest recorded inflation since October 2018. Inflation in the previous month stood at 5.4 percent and in June 2021, 3.7 percent. Average inflation for the first half of the year was  at 4.4 percent. “The uptrend of inflation for June 2022 was primarily brought about by the higher annual growth rate in the index for food and non-alcoholic beverages at 6 percent, from 4.9 percent in the previous month. This was followed by transport whose index grew by 17.1 percent annually, from 14.6 percent in May 2022,” Dennis Mapa, national statistician and civil registrar general, said in a statement.

‘PH growth the fastest in Asean+3 this year’

The Asean+3 Macroeconomic Research Office (AMRO) has upgraded its growth forecast for the Philippines this year, expecting the economy to post the fastest growth in the Asean+3 region. According to the Asean+3 Regional Economic Outlook July 2022 update released yesterday, the Philippines is seen to expand by 6.9 percent this year, faster than the 6.5 percent projection in April 2022. For 2023, the growth outlook is maintained at 6.5 percent. “We’re very optimistic on the Philippines, we expect growth to be 6.9 percent. The government is targeting seven to eight percent growth for this year. So we are slightly less optimistic than government. But nevertheless, the 6.9 percent is among the highest growth rate in the region,” Hoe Ee Khor, AMRO chief economist, said in a virtual briefing. “The Philippines was hit badly in 2020, (as it posted a) very sharp decline. But last year was strong rebound (of) 5.6 percent and this year, we expect it to rebound even more (with) 6.9 percent, and the driver for this growth is basically the opening of the economy.

Marcos Jr. administration eyes passage of remaining Duterte-era tax reforms

The Marcos Jr. administration is eyeing the passage of remaining tax reform packages left behind by former President Rodrigo Duterte. At a press conference in Malacañang on Wednesday, Finance Secretary Benjamin Diokno said the new administration would push for the passage of Packages 3 and 4 of the Duterte-era Comprehensive Tax Reform Program (CTRP). "...It will simplify a lot the tax system. So we will push for that. And then we expect that to be approved before the end of the year. And it will be implemented next year," Diokno said. "I think the estimate then is that it’s supposed to be revenue neutral. No additional revenues will be hauled from this," Diokno added. Package 3 of that tax reform program looks to build an "equitable and efficient" real property valuation system. Likewise, this measure is aimed at widening the tax base utilized for property-related taxes of national and local governments.

Bill seeking to digitalize gov't services pushed

Lawmakers of the 19th Congress are determined to digitalize state agencies through the proposed 'E-Governance Act of 2022' which seeks to shift government services to online platforms. Representatives led by Martin Romualdez of Leyte filed the E-Governance Act of 2022, embodied in House Bill (HB) No. 3. Ferdinand Alexander "Sandro" Marcos of Ilocos Norte, along with Yedda Marie Romualdez and Jude Acidre, both of party-list group Tingog, are co-authors. The bill's explanatory note read, "The shift to digital platforms has been long time coming. The COVID-19 pandemic only expedited the need for its execution. The policies in the 'new normal' must be responsive to the needs of the populace and allow them to truly feel a sense of normalcy, rather than burden them with inevitable but avoidable restrictions."

Import food to cap inflation, says Marcos economic team

Even as President Ferdinand Marcos Jr. expressed aversion to relying on importation in his inaugural address, his economic team will still turn to sourcing food items abroad to arrest spiking domestic prices. Finance Secretary Benjamin Diokno also clarified the president’s disbelief in the Philippine Statistics Authority’s report last Tuesday showing headline inflation of 6.1 percent in June, the highest monthly rate since the rice crisis of 2018. Diokno said Marcos had been briefed about the average inflation for the first half, which at 4.4 percent was above the Bangko Sentral ng Pilipinas’ (BSP) target band of manageable price hikes. The BSP had projected the inflation rate to average 5 percent this year, before easing to a still above-target 4.2 percent next year, and then a within-goal 3.3 percent by 2024, Diokno noted.

LIST: Senate committee chairmanships for 19th Congress

Senate President Pro Tempore Juan Miguel Zubiri showed the committee chairmanships in the upper chamber for the 19th Congress. Zubiri is poised to take the helm as Senate president while Senator Loren Legarda is set to be the Senate President Pro Tempore. Both have no committee chairmanship. This report provides the list of Senate committee chairmanships and positions for the 19th Congress as of July 6 as shared by Senator Zubiri. View list here.

Get to know the senators' priority bills in the 19th Congress

Senators as early as Monday, July 4, filed their priority bills under the 19th Congress. These bills include those covering sectors including education, health, transport, and labor. Other bills filed are aimed at benefiting senior citizens as well as women.

Government lowers growth target to 6.5 to 7.5%

The Marcos administration is now looking at a 6.5 to 7.5 percent economic growth in its first year in office, lower than the target set by the previous government. During a briefing at Malacañang, Finance Secretary Benjamin Diokno said the economic team has presented the medium-term fiscal framework to President Marcos during their first Cabinet meeting. With the framework, gross domestic product (GDP) is now expected to grow by 6.5 to 7.5 percent this year.

Peso seen sinking to new record low in Q1 2023

The US dollar may start to weaken this semester, but even then the Philippine peso may continue to lose against the greenback and sink to its weakest in early 2023. Deutsche Bank said in a commentary the peso remains on a downtrend over the next nine months, falling to 55.50:$1 during the current quarter then to 56:30:$1 in the fourth quarter before reaching 56.60:$1 in the first quarter of next year. After that, the German bank expects the peso to gradually gain strength and return to current levels — at about 55 per dollar — by the fourth quarter of 2023.

‘Brace for higher power costs’

Customers of Manila Electric Co. (Meralco) will have to brace for higher power costs following a Supreme Court (SC) decision voiding an order issued by the Energy Regulatory Commission (ERC) regulating prices in the Wholesale Electricity Spot Market (WESM) for November to December  in 2013. The amount to be passed on to customers  could be anywhere from P17 billion to P22.4 billion based on previous computations though the final amount is yet to be determined. In the same decision, the SC  upheld the ERC order approving the request of Meralco for a staggered collection of automatic rate adjustments arising from generation costs for November 2013. In a 32-page en banc decision released this week, the SC faulted the ERC’s decision saying it issued the order even if it was still in the process of completing its findings on the possible abuse of market power which could affect the prices of electricity in the market.

Surge in data center investments, revenue seen

The Philippines, which currently ranks second among Southeast Asian countries in terms of data center growth, recorded $298 million in investments in the sector in 2021. This is expected  to more than double to $635 million in 2027,  or  a growth 13.4 percent per annum between this year and 2027, Colliers Philippines said citing a report from Arizton Advisory & Intelligence. Co-location market revenue is expected to reach $180 million by 2027, the report added. Structure Research in a separate report said the Philippine data center colocation market is estimated to be worth $134 million this year. The sector will grow steadily at a 25 percent CAGR compound annual growth rate through 2027, mostly driven by the hyperscale market, according to Jabez Tan, head of research at the research firm. Anticipating the demand, PLDT, through its ICT arm ePLDT, is leading the capacity build with the construction of its 11th and largest hyperscale data center to date. VITRO Sta. Rosa is the first in a series of data center builds totaling a power capacity of 100MW.

Peso now region’s worst performer

The Philippine peso closed Wednesday spot trading at 55.67 against the US dollar—yet another weakest level in nearly 17 years—as fears of recession in the United States pushed the greenback to its strongest position against other currencies in two decades. The local currency landed at its weakest position against the US dollar since Oct. 20, 2005, when it closed trading at 55.71: $1.

Almost a third of retail payments now done digitally

The government is ever closer to meeting its objective of having at least half of retail transactions be paid through digital means, as the share of digital payments rose to 30.3 percent of total retail payments at the end of 2021, according to Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla. This was an improvement of about 50 percent from a share of 20.1 percent in 2020, based on the BSP’s latest e-payments data. Medalla said in a statement that, in terms of value, digital payments accounted for 44.1 percent of total retail payments in 2021, up from the 26.8 percent recorded a year earlier. The BSP chief said the key contributors to the growth of digital payments were merchant payments and peer-to-peer (P2P) remittances as well as business payments of salaries and wages to employees All of these are high-frequency and low value retail transactions, Medalla added.

Government to ramp up mining sector’s development

The Marcos administration is moving to ramp up the mining industry as part of plans to grow the economy amid the pandemic. In a television interview yesterday, Finance Secretary Benjamin Diokno said the economic team has already presented the medium-term fiscal framework to President Marcos during their first Cabinet meeting. And for targets to succeed under the two-part framework, Diokno said that all sectors would have to perform well, including the controversial mining industry. “Another major industry, mining, which was not present before, will be also accelerated,” Diokno said. “Mining was not there before when its contribution to the economy was practically nil because there was a real emphasis on environmental concerns,” he said.

Banks’ bad loans ratio dips to 3.75%

The share of bad debts to the total loans of Philippine banks eased for the third straight month to a 16-month low of 3.75 percent in May from 3.93 percent in April as the country continues to recover from the pandemic-induced recession, according to the Bangko Sentral ng Pilipinas (BSP). This was the lowest non-performing loan ratio for the country’s banking industry since the 3.72 percent recorded in January last year. It was also lower than the 4.49 percent NPL ratio recorded in May last year. The industry’s NPL ratio peaked at a 13-year high of 4.51 percent in July and August last year. Banks’ bad loans fell by 10.5 percent to P429.11 billion in May from P479.48 billion in the same month last year. On the other hand, the industry’s loan book grew at a faster rate of 6.9 percent to P11.44 trillion in May from P10.67 trillion a year ago amid the further reopening of the economy.

7 to 8% growth target challenging – Balisacan

The inter-agency Development Budget Coordination Committee (DBCC) is set to meet later this week to review growth targets to take into account the impact of price increases and disruptions caused by the conflict between Russia and Ukraine. Socioeconomic Planning Secretary Arsenio Balisacan told reporters the DBCC would meet on Friday to review the recent performance and targets. “We do not know yet what the decision will be and what the outcomes of the discussion will be, but I would expect that given the unexpected surges in some of the prices and prolonged disruptions initially triggered by this Ukraine war, seven to eight percent (economic growth) might be a challenge,” said Balisacan, who also served in the same post during the term of former president Benigno Aquino III.

PSA: Inflation not done with PH, shrinks peso value

High food and oil prices haven’t peaked yet, the Philippine Statistics Authority (PSA) said on Tuesday (July 5), even as inflation or year-on-year price hikes hit 6.1 percent in June, the highest rate since the rice crisis of 2018. With high inflation expected to linger for longer, new Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla was buckling down to wrangle with consumer prices, which he said will “in all likelihood” exceed the government’s target this year and take “many months” to sink back below 4 percent, or the level deemed manageable and conducive to economic growth. National Statistician Dennis Mapa told a press briefing that elevated food, fuel and transport costs, as well as “sin” products, like cigarettes and alcoholic drinks, contributed the most to last month’s headline inflation rate, which matched November 2018’s 6.1 percent.

Marcos To Retain COVID Alert Levels; IATF Stays, For Now

“For now, everything is status quo,” Press Secretary Trixie Cruz-Angeles said during her first press briefing held at Malacañang. The Marcos government will retain the prevailing COVID-19 alert levels in different areas and wait for the recommendation of the next secretary of the Department of Health (DOH) on the country’s pandemic response, Malacañang said on Monday, July 4. Press Secretary Trixie Cruz-Angeles said the administration is also retaining the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF) for now as the country’s pandemic policymaking body. “For now, everything is status quo,” Angeles said during her first press briefing held at Malacañang. “We just continue with the current operational setup, and then we will see what the recommendation of the new DOH secretary will be,” she added.

PH ready to sign free trade pact with S.Korea

The Philippines’ free trade agreement (FTA) with South Korea is inching closer to formalization with the initial signing of the economic pact seen within the next two weeks. Trade Secretary Alfredo Pascual, in an interview with the Inquirer, said that “both sides are already undertaking legal review of the English text of the Philippine-South Korea FTA.” “Hopefully within two weeks, we can [initially sign] and both sides can then undertake the domestic [approvals] so the agreement can be officially and formally signed,” he added. An initial signing means that negotiating parties have agreed on the terms of the FTA, Pascual explained. In October last year, Manila and Seoul concluded their FTA negotiations after over two years of discussion. This was followed by “legal scrubbing” of the provisions of the FTA.

Marcos puts focus on economy in first Cabinet meeting

PHILIPPINE President Ferdinand R. Marcos, Jr. on Tuesday said his government would strive to limit imports, even as the prices of basic goods continue to soar. The new Philippine leader made the statement after he held his first Cabinet meeting that heavily focused on the economy earlier in the day. Mr. Marcos said his administration would rather boost local production than rely on importation to address an impending food crisis, vowing to significantly increase the output of rice and corn. “We will do it in the Department of Agriculture to boost the production of rice and corn in the next two quarters, until Christmas,” he told a televised news briefing. “We prefer not to import. We prefer to import as little as possible.” Still, the Philippines would still import pork due to tight local supply as the hog industry is still recovering from African Swine Fever (ASF) outbreak, Mr. Marcos said.

Expert panel bats for ‘traffic light’ approach for AL systems [Mention]

The Advisory Council of Experts (ACE), a consultative group of private sector representatives, medical, and economic experts, proposes to the so-called “traffic light” approach for alert level (AL) systems. In a statement issued on Thursday, GoNegosyo founder and ACE Convenor Jose Maria A. Concepcion emphasized that “the task of this process is to lay down the parameters of a transition strategy for a better normal, one that encourages economic activity and does not risk the public’s health.” Among the groups is the European Chamber of Commerce of the Philippines.

PHL lags ASEAN in solar, wind energy generation — think tank

The Philippines lags regional peers in terms of the share taken up by solar and wind energy in its power mix, energy think tank Ember said in a report on Thursday. The Philippines accounts for 10% of power generated in the region, but solar and wind made up only 2.6% of its power mix in 2021, it said. This is below the 4% average across the Association of Southeast Asian Nations (ASEAN) and the 10% global average, Ember said. Despite having the second-highest demand growth in the region, only 12% of total electricity demand in the Philippines was serviced by clean sources, it said.

Diokno wants local gov’t units to tap Mandanas funds for agriculture

The National Government is hoping local government units (LGUs) will channel their expanded budgets into raising agricultural output, Finance Secretary Benjamin E. Diokno said. Mr. Diokno said in an interview with ANC on Wednesday that LGUs “incidentally have a lot more money now because of the Mandanas ruling,” referring to a Supreme Court (SC) decision that ordered the National Government to make bigger transfers to local governments. In effect, “there will be a friendly competition among LGUs to boost agricultural products,” Mr. Diokno added. The Supreme Court’s Mandanas-Garcia ruling granted LGUs a larger share of the national taxes after the SC liberally interpreted the Local Government Code in the LGUs’ favor. The Code requires that any doubt in interpretation must be resolved in favor of more decentralization.

Marcos: Phased Face-To-Face Classes Rolled Out In September

President Marcos said implementing full face-to-face classes would require discussions on COVID-19 vaccination “because there are going to be some issues that would be raised.” As the Philippines, especially Metro Manila, continues to record an uptick in COVID-19 cases, the government will roll out phased face-to-face classes in September before the conduct of full in-person learning, President Marcos announced on Tuesday, July 5. “There are some things that are immediately accessible in the sense that we can start doing something about it already. The first thing that is an example of that was Vice President Sara Duterte’s announcement that we have a plan for full face-to-face learning by November of this year,” Marcos said at a press briefing.

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