ECCP at Work

ECCP@Work Featured Articles | September 5, 2023

September 05, 2023

ECCP Online

ECCP at Work

Philippine inflation rose to 5.3% in August

Headline inflation revved up to 5.3 percent in August, after waning throughout the previous six months, bringing the average since January to 6.6 percent, according to the Philippine Statistics Authority. The result for August is closer to the upper end of the Bangko Sentral ng Pilipinas’ expected range of 4.8 percent to 5.6 percent.

Foreign chambers eye PSAC for policy boosting foreign investments in PH

The Joint Foreign Chambers of the Philippines (JFC) recently convened a significant meeting with Sabin Aboitiz, the Lead Convenor of the Private Sector Advisory Council (PSAC) and President and CEO of the Aboitiz Group; this landmark dialogue, held recently, marked a pivotal moment to recommend policies, flagship programs, and legislative concerns, fostering an environment of collaboration and partnership to drive sustainable economic growth in the Philippines. The JFC shared their priority legislative proposals and other policy concerns, reflecting the collective interests of the foreign business community operating in the Philippines.

PH's largest logistics firm considers Cagayan de Oro as the 'biggest shipping hub' in Mindanao [mention]

According to Leah Magdamit, the senior business development manager of 2GO Group Inc., Cagayan de Oro presents an ideal foothold for 2GO to flourish in Mindanao, citing that the city is the regional center, logistics and business hub of Northern Mindanao. "Cagayan de Oro radiates promise as a dynamic city. A reliable logistics collaborator is integral for a burgeoning economy as it paves the way to becoming a metropolitan center," Ralph Paguio, the chairman for the European Chamber of Commerce of the Philippines-Northern Mindanao, said.

OECD trims PHL growth forecast for this year

In its latest Economic Outlook for Southeast Asia, China, and India update, the OECD said it now expects Philippine GDP to expand by 5.6% this year, slightly lower than the 5.7% projection in March. The OECD said elevated inflation and higher borrowing costs dragged private consumption and investments in the second quarter. The slowdown was also amplified by the contraction in government spending, it added. The OECD noted that private investment is also expected to slow due to high interest rates and a weaker global economy. On the other hand, landmark reforms and improving investor sentiment could help the country attract more foreign direct investments.

Health spending share of GDP falls to 5.5% in 2022

The PSA, citing preliminary data, said the share of national health expenditure of gross domestic product (GDP) had fallen to 5.5% from a revised 6.3% in 2021. Robert Dan J. Roces, chief economist at Security Bank Corp., said in an e-mail that health spending in 2022 was likely diverted to other priorities as the government changed, while the cost of healthcare rose due to inflation. Makoto Tsuchiya, assistant economist at Oxford Economics, said the decline in healthcare spending both in absolute terms and as a share of GDP in large part reflects normalization of spending after the pandemic.

Philippines air traffic soars in H1

The Civil Aeronautics Board (CAB) said domestic passenger traffic grew by more than half to 14.56 million from January to June from 9.69 million a year ago.When compared, this translates to 65 percent of the total volume in 2022, signaling the return of domestic travel after pandemic restrictions were lifted nationwide. Low-cost carrier Cebu Pacific and its regional unit Cebgo flew over half of the passenger total in the first semester at 7.65 million. On the other hand, flag carrier Philippine Airlines (PAL) and its budget arm PAL Express served 28 percent or 4.09 million of the domestic travelers during the period. AirAsia Philippines came next with 2.54 million.

More portfolio investments enter Philippines

Short-term investment flows remained positive for the second straight month, surging to $962.04 million in July, following June’s $280,000, according to the Bangko Sentral ng Pilipinas (BSP). For the month of July alone, the net inflow reversed the $103.14-million net outflow recorded in the same month last year. The inflow of hot money surged by 131.6 percent to $1.57 billion in July from a year-ago level of $680.73 million. The Philippines registered a net inflow of hot money amounting to $1 billion last year, reversing the net outflow of $2.4 billion in 2021 amid the impact of the COVID-19 pandemic. The BSP sees a hot money net inflow of $2.5 billion this year and $3.5 billion next year.

Further widening of trade gap seen

Nomura Global Markets Research sees the country’s trade deficit widening further by 25.6 percent to $4.9 billion in July from $3.9 billion in June amid the continued contraction in exports and increase in imports. Latest data from the Philippine Statistics Authority (PSA) showed the country’s trade deficit narrowed by 6.3 percent to $27.95 billion in the first half of the year. Latest data from the Philippine Statistics Authority (PSA) showed the country’s trade deficit narrowed by 6.3 percent to $27.95 billion in the first half of the year.

PH manufacturing sector ends 2 years of growth

The company’s Philippines PMI or purchasing managers index read at 49.7 in August, which signaled a contraction. A PMI — which is based on a monthly survey of managers — of above 50 means an overall increase (more positive responses than negative) while less than 50 means an overall decrease (more negative answers than positive). S&P Global Market Intelligence economist Maryam Baluch said that even if some manufacturers were beefing up their stocks in anticipation of greater sales in the coming months, decreased orders and hiring showed “visible cracks” in the sector.

Marcos move worries agri biz groups, think tanks

Various groups expressed concern over President Marcos’ imposition of a price cap on rice, saying the move would not only adversely affect domestic supply but also impact the livelihood of farmers. For Federation of Free Farmers national manager Raul Montemayor, the price ceiling being set looks “unrealistically low.” Another think tank, IBON Foundation, said the order would further depress the already low farm-gate price—or the selling price between farmers and traders—without “meaningful” production support and a crackdown on traders’ price-taking. Amihan, Bantay Bigas and KMP shared the view that the government should instead go after big private traders and rice cartels—not small retailers—as they are the players who influence local supply and cause the price hikes in the markets. Only Samahang Industriya ng Agrikultura (Sinag) lauded the Marcos administration’s latest move, seeing no reason for retail prices to surge.

PUV modernization program will push through despite zero budget

The Department of Transportation (DoTr) said it would implement its modernization program for public utility vehicles (PUV) despite receiving zero funding for next year, Transportation Secretary Jaime J. Bautista told congressmen on Monday. “We requested from the DBM (Department of Budget and Management) a budget of P1.8 billion. Unfortunately, we were not given any budget in the NEP (National Expenditure Program), but we will continue the modernization program,” Mr. Bautista told a House appropriations committee budget hearing. Since the PUV modernization program was also left out of the Department of Transportation’s (DoTr) 2023 budget, he said they would just move for the consolidation of the PUV industry.

PHL external debt service up 160% as of end-May

The Philippines’ debt service burden on its external debt more than doubled as of end-May amid high global interest rates. Data from the Bangko Sentral ng Pilipinas (BSP) showed the Philippines’ debt service burden on its external debt increased by 160% to $6.5 billion from $2.5 billion a year ago. The debt service burden refers to the amount of money a country needs to pay back to its foreign creditors. It includes both the principal and interest payments on its external debt. BSP data showed principal payments climbed by 164.3% to $3.7 billion from $1.4 billion a year ago.

PH laws too restrictive on mining sector, says PCCI

Philippine Chamber of Commerce and Industry (PCCI) said local laws were restrictive for the mining sector, holding back the potential of the sector to be a major economic contributor. George Barcelon, PCCI president, last week said that the government was imposing numerous taxes on commercial mining firms as well as environmental regulations that were causing investors to hesitate. “The fact is, when our laws are too strict, the legitimate miners tend to be more careful because it’s a big investment,” Barcelon said during a forum.

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