World Bank upgrades growth outlook on Philippines, but inflation still a threat

The World Bank said the Philippine economy would likely grow faster than initially projected this year on the back of strong consumer demand, although high inflation remains a big threat. In its Philippines Economic Report released Wednesday, the Washington-based multilateral lender said the economy would likely grow 6.0% this year, higher than its old projection of 5.6% growth back in April. If realized, the Bank’s new forecast for the Philippines would match the low end of the Marcos Jr. administration’s target for this year, which pegged economic growth to clock in at 6-7%.

Philippine inflation slowest in a year

Philippine inflation cooled for a fourth straight month in May to the lowest in a year as food and transport prices eased, giving the central bank room to keep key rates steady. The consumer price index slowed to 6.1% from 6.6% in April, though it was faster than  5.4% a year earlier, matching the median estimate in a BusinessWorld poll last week. Still, it was the 14th straight month that inflation breached the central bank’s 2-4% goal. In a statement, the BSP said the Monetary Board would consider its inflation and macroeconomic outlook at its monetary policy meeting on June 22.

Jobless and underemployment rate improves in April as economy churns

The Philippine Statistics Authority reported the results of a nationwide survey of 44,017 households showed there were 2.26 million Filipinos who were either jobless or out of business in April, lower than 2.42 million unemployed persons tallied in March. That translated to an unemployment rate of 4.5% in March, inching down from the preceding month's rate of 4.7%.

PH trade deficit shrank by nearly 15% in April

The Philippines’ deficit in the trade of goods shrank by 14.9 percent year-on-year in April when the import bill exceeded export earnings by $4.53 billion compared to $5.3 billion in the same month last year. Preliminary data at the Philippine Statistics Authority show that while the trade gap narrowed significantly, two-way traffic of goods in April also declined by 18.6 percent to $14.3 billion from $17.6 billion.

Gov’t could boost infra spending to 12% of GDP

THE PHILIPPINES could boost infrastructure spending to as much as 12% of economic output as early as next year if its sovereign wealth fund goes as planned, according to its Finance chief. “The 5-6% will come from the national budget,” Finance Secretary Benjamin E. Diokno said. “If public-private partnerships (PPP) and the Maharlika Investment Fund are continued, we might reach 10-12% per year.” The government plans to spend 5.3% of the gross domestic product (GDP) or about P1.29 trillion on infrastructure this year. Infrastructure spending is expected at 5-6% of GDP until 2028. A number of priority projects are undergoing feasibility studies, while some are in the detailed engineering phase, Mr. Diokno said.

Philippine to grow faster than regional peers – NEDA

The National Economic and Development Authority (NEDA) has expressed confidence in the Philippines’ growth momentum as it expects the country to grow faster than many of its peers in the region. NEDA Secretary Arsenio Balisacan emphasized the economy remains resilient as it grew by 7.6 percent in 2022 and expanded by 6.4 percent in the first quarter this year. “The momentum remains strong. Various multilateral institutions project that the country will be among emerging Asia’s brightest economies this year, despite the external headwinds of the global economic slowdown. We expect to grow faster than many of our peers in the region,” he said.

Export laggard PH to catch up via PEDP

The government is looking at turning the Philippines from being an “export laggard” to an “agile export powerhouse” as President Marcos Jr. approved yesterday the Philippine Export Development Plan (PEDP) 2023 to 2028 which shall serve as the blueprint for the country’s improvement of its export of goods and services in the next five years. Secretary Alfredo Pascual of Department of Trade and Industry said the Philippines lags in merchandise export but performs well in services, led by the business process outsourcing industry. Pascual said one of the strategies in the PEDP is to undertake “firm-level” interventions that would address specific constraints, such as inability to meet orders and lack of skilled workers.

NAIA privatization possible by early 2024 – DOTr exec 

“We can say that by the first quarter of next year, it is doable that there will be a conclusion…that could possibly be proclaimed by the government,” Undersecretary for Aviation and Airports Roberto Lim said Lim noted that the privatization process would take a while, given negotiations between the government and interested private companies.

Higher renewable energy growth mandate takes effect

The DOE has doubled the increment of renewable energy (RE) installations under its Renewable Portfolio Standards (RPS) policy in the main grid to 2.52 percent beginning this year in a bid to accelerate the agency’s goal of increasing the share of renewables in the Philippine energy mix. This means that the increase in the share of RE in the supply portfolio of off-taker distribution utilities (DUs) must have a growth rate of 2.52 percent every year. Under Department Circular No. 2023-05-0015, Energy Secretary Raphael Lotilla said all mandated participants in the country’s three island grids were covered by the new rate. This was increased based on the DOE’s annual review aimed at accelerating the agency’s plan to increase RE share in the energy mix from the current 21 percent to 35 percent by 2030 and 50 percent by 2040.

Infrastructure development in Philippines to accelerate further – Nomura

Nomura of Japan sees infrastructure development in the Philippines accelerating further in the next few years as the Marcos administration aims to raise annual spending from the level prior to the pandemic. Nomura said infrastructure implementation is on a fast track in the region. To boost execution, Nomura said these countries have rectified past problems of underspending, improved planning, simplified procurement rules, enhanced land acquisition, increased the participation of state-owned enterprises (SOEs) and strengthened project monitoring systems. “We believe concrete progress in executing public infrastructure plans is also boosting private sector participation from both local and foreign sources, helping to ease fiscal funding constraints that have increased after the pandemic,” Nomura said.

Easing of inflation to 6.1% encouraging – Marcos

The easing of inflation to 6.1 percent in May is “encouraging” as it indicates that the administration is heading in the right direction in terms of keeping the prices of goods affordable and stable, President Marcos said yesterday. Claiming that the Philippines has one of the best growth rates in the world, Marcos gave assurance that his administration would continue to undertake measures to bring the economy back to good health. The Philippine Statistics Authority (PSA) announced the easing of the country’s inflation rate for the fourth straight month in May due to slower increases in transport and food prices. National Statistician Dennis Mapa said at a briefing, headline inflation or the rate of increase in prices of goods and services slowed down to 6.1 percent in May from 6.6 percent in April. This is the lowest inflation rate since the 5.4 percent in May last year.

Pandemic demand helped agri wages, employment recover, study concludes

Employment and real wages in agriculture recovered during the pandemic due to surging demand for produce, the PIDS said. “The experience of agriculture during the COVID-19 crisis had evidently been a unique one in the Philippines, with the sector’s employment share increasing, temporarily interrupting a declining trend that had persisted over the last 15 years,” it said in a study. “Agriculture had been the only sector where both employment and wages were able to simultaneously rise eventually, indicating robust demand,” it added. PIDS said the industry was not impacted by employment or wage declines due to the nature of work in agriculture.

SEC readies updated sustainability reporting rules

The SEC is aiming to release updated sustainability reporting guidelines within the year or early next year, a commissioner said. “We will come out either this year or early next year [with] the next step of Memorandum Circular No. 4, which mandated sustainability reporting for publicly listed companies,” SEC Commissioner Kelvin Lester K. Lee said. Memorandum Circular No. 4 has a “comply or explain” approach, which means companies are required to attach the annual report template but may provide an explanation for items with still unavailable data. Previously, the SEC was keen on making the entire sustainability report mandatory for publicly listed companies. “The feedback has been that it might be too difficult for some of the publicly listed companies, especially considering they are not from the same starting point,” Mr. Lee said. “Not everyone is as well-equipped as the big companies.”

Marcos approves export industry blueprint

President Marcos, Jr. has approved the blueprint for the Philippine export industry, days after its membership in the world’s biggest free trade agreement took effect, according to the Trade department. Under the Philippine Export Development Plan, the government will enforce “industry-level” interventions to address challenges facing the sector, which has lagged regional rivals, Trade Secretary Alfredo E. Pascual said. “In the past, we simply did policies at the macro level that applied to the whole economy,” he said. “But what we’re proposing in the export development plan is industry-level intervention or policy issuances that will support the sector’s development.” The Philippines ratified the Regional Comprehensive Economic Partnership (RCEP) in April. The trade deal, which covers nearly a third of the global population and about 30% of its global gross domestic product, took effect locally on June 2. Under the Export Development Act of 1994, the Trade department must prepare a rolling three-year plan for the sector. It is part of the Medium-Term Philippine Development Plan, which is now called the Philippine Development Plan. 

BSP cuts reserve ratio, flags rate lull

The central bank would cut the ratio for universal and commercial banks and nonbank financial institutions with quasi-banking functions by 250 basis points (bps) to 9.5%, BSP Governor Felipe M. Medalla told reporters. It will also cut the ratio for digital banks by 200 bps to 6% and by 100 bps for thrift banks, and rural and cooperative banks to 2% and 1%, respectively.

BTr fully awards Tbonds

The Bureau of the Treasury (BTr) has fully awarded the reissued 10-year treasury bonds during yesterday’s auction as it fetched a lower rate. With a remaining term of four years and nine months, the security fetched an average rate of 5.805 percent. This is lower than the coupon rate of 6.25 percent set on its first issuance in April 2018 and the previous five-year auction result. The auction was 1.7 times oversubscribed with total tenders reaching P41.7 billion. With its decision, the BTr raised the full program of P25 billion. This brings the total outstanding volume for the series to P100.2 billion. The BTr also fully awarded bids for the treasury bills auctioned as rates were aligned with secondary market levels.

8 in 10 concerned over energy security

Eight in 10 of the energy stakeholders in the Philippines consider security of energy supply as the top concern of their organizations, results of a study released by global professional services company GHD showed. This developed as the Department of Energy (DOE) said the country’s energy transition is gearing towards a “just transition” which must occur over a reasonable period and should also not compromise economic growth. Based on GHD’s study, the proportion of stakeholders which  consider security of energy supply as their main concern is higher than the global average of 75 percent.

'Pension funds, Maharlika can invest in same project'

Senator Joel Villanueva said state-led pension funds like the GSIS and SSS can still invest in projects backed by the Maharlika Investment Fund even if they can't invest in the MIF itself. Villanueva, who is also Senate Majority Floor leader, said the Maharlika bill passed by Congress allows state-led pension funds to enter into joint venture projects with the Maharlika Investment Corporation (MIC), the state-led company that manages the MIF.

DOE Secretary Raphael P.M. Lotilla is pleased with the heightened enthusiasm of local and international investors for unlocking the country’s renewable energy (RE) potential

Energy Secretary Raphael P.M. Lotilla is pleased with the heightened enthusiasm of local and international investors for unlocking the country’s renewable energy (RE) potential. Recently, BlueFloat Energy announced its market entry in the Philippines through the acquisition of Wind Energy Service Contracts (WESCs) in four sites to be located in Bataan, Batangas, Cagayan & Ilocos, and Southern Mindoro. With headquarters in Spain, BlueFloat has a total portfolio of offshore wind projects worth 32.4 gigawatts (GW) of planned capacity in ten countries across the globe, including Spain, France, Italy, Scotland, Australia, New Zealand, Taiwan, Colombia, Portugal, and the Philippines.

Higher renewable energy growth mandate takes effect

The Department of Energy (DOE) has doubled the increment of renewable energy (RE) installations under its Renewable Portfolio Standards (RPS) policy in the main grid to 2.52 percent beginning this year in a bid to accelerate the agency’s goal of increasing the share of renewables in the Philippine energy mix. This means that the increase in the share of RE in the supply portfolio of off-taker distribution utilities (DUs) must have a growth rate of 2.52 percent every year. Under the recently issued Department Circular No. 2023-05-0015, Energy Secretary Raphael Lotilla said all mandated participants in the country’s three island grids were covered by the new rate. Mandated participants include all DUs, retail electricity suppliers, generating companies and other entities approved by the DOE. The new rate will be applied to the net electricity sales of the mandated participants and will continue to be adjusted by the DOE “as necessary to ensure that the objectives of the [Renewable Energy Act of 2008] are achieved.”

Flexible co-working space provider expands 

Leading flexible co-working space provider IWG plc sees strong growth of the industry as more companies tap hybrid work arrangement as part of their rightsizing strategy. Lars Wittig, IWG plc country manager and senior vice-president Asean, told reporters in a recent interview the new coronavirus disease 2019 pandemic has pushed firms into adopting new ways to operate. Wittig said some companies look at hybrid work as a permanent solution to provide flexibility and agility to their workers and operations. This prompts traditional office spaces providers to reinvent and allot some commercial spaces for flexible work.

Digitization of healthcare, improved access to meds among Herbosa's priorities
Newly-appointed Health Secretary Teodoro Herbosa said Thursday he will prioritize the digitization of the country’s healthcare system and improving access to essential medicine during his leadership. Herbosa said that digitizing the healthcare system can make services accessible even in the country’s remote communities—places that lack access to the internet and stable mobile connection. Herbosa also wants to digitize the financial processes of the health department such as the disbursement of funds, and the procurement of supplies, equipment and services.He has tapped Health Undersecretary Eric Tayag to be the DOH's chief information officer, citing his experience in leading the agency’s Knowledge Management and Information Technology Service.

Philippines' GIR level at $101.3 billion in May: BSP

The Philippines' gross international reserves (GIR) level settled at $101.3 billion as of the end of May, slightly lower than the $101.8 billion in April, the Bangko Sentral ng Pilipinas said. In a statement, the central bank said the latest GIR level is more than adequate external liquidity buffer equivalent to 7.6 months' worth of imports of goods and payments of services and primary income. It is also about 5.9 times the country's short-term external debt based on original maturity and 4.2 times based on residual maturity, it added. The month-on-month decrease in the GIR level reflected mainly the national government’s (NG) net foreign currency withdrawals from its deposits with the BSP to settle its foreign currency debt obligations and pay for its various expenditures, and downward adjustments in the value of the BSP’s gold holdings due to the decrease in the price of gold in the international market," said the BSP.

PH data center space seen attracting more investments

More investments in the data center space are seen to flow into the country amid the great demand from hyperscalers looking for the next data hub at a time of heightened digitalization, according to information technology infrastructure company Kyndryl.Wilson Go, Kyndryl Philippines managing director, said in a briefing in Makati on Tuesday that hyperscalers were keen on establishing footprint in the country.