The Philippine central bank raised its benchmark rate to tame inflation, saying the economy is ``strong enough'' to withstand a third increase in borrowing costs since June. Bangko Sentral ng Pilipinas increased the rate it pays banks for overnight deposits by 0.25 percentage point to 6 percent, Governor Amando Tetangco told reporters in Manila today.
Q2 2008 GDP
Philippine economic growth eased to a three-year low of 4.6 percent in the second quarter as consumer spending waned, the government said today. Inflation may have accelerated to as much as 12.6 percent in August from 12.2 percent in July, and may exceed the central bank's targets for 2008 and next year, Governor Tetangco said today. Bangko Sentral last month raised its 2008 inflation forecast to a range of 9 percent to 11 percent, from 7 percent to 9 percent. The government this month lowered its 2008 growth target for a second time this year to between 5.5 percent and 6.4 percent, which would be a slowdown from the 7.2 percent expansion in 2007.
Remittances from the more than 8 million Filipinos abroad, or about a tenth of the population, have continued to support the $118 billion economy this year as faster inflation eroded domestic consumer spending. Consumer spending growth slowed to 3.4 percent in the second quarter from 5.2 percent in the previous three months. Government spending, which accounts for a tenth of the economy, fell 5.1 percent.
Exports, which make up two-fifths of the economy, added 7.7 percent from a year earlier, after a 6.1 percent drop in the first quarter. Services climbed 4.3 percent, slower than the 6.5 percent pace in the previous three months.
Thursday, August 28, 2008
Wednesday, August 20, 2008
Philippine Government Cuts Growth Forecast
The Philippine government cut its 2008 economic-growth forecast today for the second time this year as faster inflation hurt consumption, adding pressure on the government to boost spending on food and fuel subsidies to the poor. Gross domestic product is now expected to expand between 5.5 percent to 6.4 percent this year, down from an earlier forecast of as much as 6.6 percent, according to Economic Planning Undersecretary Augusto Santos.
Philippine stocks and the peso fell on concern the government may expand subsidies for the third of the 96 million population that lives on less than a $1 a day, widening the fiscal deficit.
President Gloria Arroyo in May pledged to boost investment and lift spending on rice and other subsidies to help Filipinos cope with soaring prices, abandoning her plan to balance the budget this year. Finance Secretary Gary Teves has said the government may post a 2008 deficit of 40 billion pesos to 75 billion pesos.
The $118 billion economy expanded 5.2 percent in the first three months of 2008, the slowest pace in six quarters. Inflation in the Philippines accelerated to 12.2 percent last month, the fastest pace in more than 16 years, crimping consumer spending that makes up 70 percent of the economy. The government first cut its growth target in May to 5.7 percent to 6.6 percent this year, from 6.3 percent to 7 percent previously. It will release second-quarter economic data next week.
Philippine stocks and the peso fell on concern the government may expand subsidies for the third of the 96 million population that lives on less than a $1 a day, widening the fiscal deficit.
President Gloria Arroyo in May pledged to boost investment and lift spending on rice and other subsidies to help Filipinos cope with soaring prices, abandoning her plan to balance the budget this year. Finance Secretary Gary Teves has said the government may post a 2008 deficit of 40 billion pesos to 75 billion pesos.
The $118 billion economy expanded 5.2 percent in the first three months of 2008, the slowest pace in six quarters. Inflation in the Philippines accelerated to 12.2 percent last month, the fastest pace in more than 16 years, crimping consumer spending that makes up 70 percent of the economy. The government first cut its growth target in May to 5.7 percent to 6.6 percent this year, from 6.3 percent to 7 percent previously. It will release second-quarter economic data next week.
Saturday, August 9, 2008
Philippine Exports June 2008
Philippine export growth accelerated to a four-month high in June as a weaker peso made the country's disk drives and mobile-phone chips cheaper and shipments to China countered weakening demand from the U.S. Shipments abroad rose 8.3 percent from a year earlier to $4.49 billion, compared with a 2.3 percent gain in May, according to preliminary figures released by the National Statistics Office in Manila today.
The peso, last year's best performer in the region, fell for a fourth month in June, boosting the foreign-currency earnings of exporters.
Overseas sales account for about two-fifths of the Philippines' $118 billion economy, which grew at the slowest pace in six quarters in the first three months of the year. Sales of electronics, which make up two-thirds of the Philippines' total exports, climbed 6.4 percent from a year earlier to $2.63 billion.
Philippine shipments to China rose 8.8 percent in June from a year earlier to $491 million. Exports to Hong Kong advanced 10.5 percent to $436 million.
Sales to the U.S., the Philippines' biggest overseas market, declined 0.1 percent to $703 million in June. Shipments to Japan, the No. 2 destination, gained 2.6 percent to $652 million. Exports of clothing for fashion houses such as Polo Ralph Lauren and The Gap declined 7.6 percent.
Remittances from Philippine citizens working abroad also amounted to 13% of GDP in 2006 according to World Bank estimates.
The peso, last year's best performer in the region, fell for a fourth month in June, boosting the foreign-currency earnings of exporters.
Overseas sales account for about two-fifths of the Philippines' $118 billion economy, which grew at the slowest pace in six quarters in the first three months of the year. Sales of electronics, which make up two-thirds of the Philippines' total exports, climbed 6.4 percent from a year earlier to $2.63 billion.
Philippine shipments to China rose 8.8 percent in June from a year earlier to $491 million. Exports to Hong Kong advanced 10.5 percent to $436 million.
Sales to the U.S., the Philippines' biggest overseas market, declined 0.1 percent to $703 million in June. Shipments to Japan, the No. 2 destination, gained 2.6 percent to $652 million. Exports of clothing for fashion houses such as Polo Ralph Lauren and The Gap declined 7.6 percent.
Remittances from Philippine citizens working abroad also amounted to 13% of GDP in 2006 according to World Bank estimates.
Tuesday, August 5, 2008
Philipine Price Inflation
The Philippine annual inflation rate, as measured by consumer price index, continued to accelerate in July, hitting a near 17-year high of 12.2 percen. June inflation was 11.4 percent while inflation in July 2007 was only 2.6 percent, according to the latest data from the National Statistics Office. The July figure was the highest since December 1991.
Higher annual inflation rates were registered in all the commodity groups except in the fuel, light and water index. The overall annual inflation rate for food alone further climbed to 18.6 percent in July from 17.4 percent in June. Higher year-on-year inflation was noted in rice at 50.0 percent in July up from 43.0 percent in June; corn, 40.6 percent from 34.3 percent; cereal preparations, 17.6 percent from 16.6 percent.
But the National Statistics Office pointed out that the monthly increase in consumer prices slowed to 1.5 percent in July from 2.3 percent in June. Monthly price increases slowed in food, beverage and tobacco - at 1.6 percent in July from 3.0 percent in June and services, at 3.1 percent from 4.0 percent.
The annual core inflation rate, which strips out volatile food and energy items, slipped to 6.3 percent in July from 6.6 percent in June. However, as the July inflation exceeded the central bank's forecast range of 11.2 - 12 percent, it is clear that the central bank might feel forced to hike interest rates again at the next meeting at the end of August. This would then be the third hike since June.
Philippine central bank policymakers last voted on July 25 to hike overnight rates to 5.75 percent for borrowing and 7.75 percent for lending. Central bank officials have said they expect inflation to peak in the fourth quarter before falling back to an acceptable level in the first quarter of 2009.
The Philippines, which buys most of its fuel from abroad and has is now the world's largest rice importer, is one of the Southeast Asian countries worst hit by inflation. The central bank has twice revised its inflation projection of the year from an impossible 3 - 5 percent to currently 9 - 11 percent.
Phillipine producer prices remain contained, hitting only 3.3% in June, which is the latest month for which we have data.
Higher annual inflation rates were registered in all the commodity groups except in the fuel, light and water index. The overall annual inflation rate for food alone further climbed to 18.6 percent in July from 17.4 percent in June. Higher year-on-year inflation was noted in rice at 50.0 percent in July up from 43.0 percent in June; corn, 40.6 percent from 34.3 percent; cereal preparations, 17.6 percent from 16.6 percent.
But the National Statistics Office pointed out that the monthly increase in consumer prices slowed to 1.5 percent in July from 2.3 percent in June. Monthly price increases slowed in food, beverage and tobacco - at 1.6 percent in July from 3.0 percent in June and services, at 3.1 percent from 4.0 percent.
The annual core inflation rate, which strips out volatile food and energy items, slipped to 6.3 percent in July from 6.6 percent in June. However, as the July inflation exceeded the central bank's forecast range of 11.2 - 12 percent, it is clear that the central bank might feel forced to hike interest rates again at the next meeting at the end of August. This would then be the third hike since June.
Philippine central bank policymakers last voted on July 25 to hike overnight rates to 5.75 percent for borrowing and 7.75 percent for lending. Central bank officials have said they expect inflation to peak in the fourth quarter before falling back to an acceptable level in the first quarter of 2009.
The Philippines, which buys most of its fuel from abroad and has is now the world's largest rice importer, is one of the Southeast Asian countries worst hit by inflation. The central bank has twice revised its inflation projection of the year from an impossible 3 - 5 percent to currently 9 - 11 percent.
Phillipine producer prices remain contained, hitting only 3.3% in June, which is the latest month for which we have data.
Thursday, July 17, 2008
Philippine Central Bank Raises Interest Rates
The Philippine central bank raised its benchmark interest rate by the most since 2000on 17 July and forecast inflation will exceed last month's 14-year high on record oil and food prices. Bangko Sentral ng Pilipinas increased the rate it pays banks for overnight deposits by 0.5 percentage point to 5.75 percent.
Fuel prices in the Philippines have risen every week since April and rice costs have jumped 70 percent this year - the Philippines is the world's biggest importer of rice and buys almost all of its oil from abroad.
Bangko Sentral increased its 2008 inflation estimate to a range of 9 percent to 11 percent today, from a previous prediction of 7 percent to 9 percent, citing a weak peso and higher food, transportation and energy costs.
GDP growth probably accelerated to 5.6 percent in the second quarter, the central bank also said today. The $118 billion economy expanded 5.2 percent in the first three months, the slowest in more than a year.
Fuel prices in the Philippines have risen every week since April and rice costs have jumped 70 percent this year - the Philippines is the world's biggest importer of rice and buys almost all of its oil from abroad.
Bangko Sentral increased its 2008 inflation estimate to a range of 9 percent to 11 percent today, from a previous prediction of 7 percent to 9 percent, citing a weak peso and higher food, transportation and energy costs.
GDP growth probably accelerated to 5.6 percent in the second quarter, the central bank also said today. The $118 billion economy expanded 5.2 percent in the first three months, the slowest in more than a year.
Wednesday, March 12, 2008
Rice Shortages In Philippines?
Roel Landingin and Javier Blas writing in the Financial Times:
The Philippines failed to buy enough rice on Tuesday to boost its inventories and faced prices more than 40 per cent higher than two months ago in the latest sign of a rapid tightening of the global rice market.
The failure underscores the risk that rice could be in short supply in south-east Asia countries, where the grain is a staple food. It also signals further food inflation pressures in the region, where consumer prices are rising quickly.
The world’s largest rice exporters, including Vietnam, India and Egypt, have imposed foreign sales restrictions to keep their domestic markets well supplied, tightening further the global market. More curbs are likely in the coming months as the rice market faces strong demand and lagging supplies, the US Department of Agriculture has warned. Global rice stocks are set to fall this year to about 70m tonnes, the lowest level in 25 years and less than half the 150m tonnes held in inventories in 2000.
At Tuesday’s auction, traders offered to sell the Philippines, the world’s largest rice importer, about 325,000 tonnes. The Philippines had hoped to buy 550,000 tonnes. Prices ranged from $618.50 to $745 per tonne, on average, 43 per cent higher than the $474.40 (£236.33, €309.11) per tonne paid in January. Thai rice prices, a global benchmark, last month broke above the $500-a-tonne level for the first time since 1989.
Gloria Macapagal Arroyo, the Philippine president, on Tuesday approved an incremental budget of 2.85bn pesos (£34m, $69m, €45m) to boost production of crops, mainly rice and corn, according to Arthur Yap, the agriculture secretary.
Amid fears of shortages, Manila took the unprecedented step last month of asking Vietnam to guarantee rice supplies of about 1.5m tonnes in a government-to-government deal.
But Vietnam said it would supply only about 1m tonnes, of which 700,000 tonnes represents previous contracts.
The Philippines could tap into regional emergency rice stockpiles to cover its imports requirements. The East Asian Emergency Rice Reserve, a scheme run by the Association of South-East Asian Nations (Asean), Japan, China and Korea, provides rice supplies to countries hit by disasters and other emergencies.
So far, the Philippines has ordered 876,700 tonnes of the commodity in the international market. “We’ll just have to try again and again until we meet our requirements,” said Mr Yap. “We are not chasing any price. Our aim is to ensure there’s enough supply.”
Local prices in the Philippines are already up 10 fold from a year ago.
The Philippines failed to buy enough rice on Tuesday to boost its inventories and faced prices more than 40 per cent higher than two months ago in the latest sign of a rapid tightening of the global rice market.
The failure underscores the risk that rice could be in short supply in south-east Asia countries, where the grain is a staple food. It also signals further food inflation pressures in the region, where consumer prices are rising quickly.
The world’s largest rice exporters, including Vietnam, India and Egypt, have imposed foreign sales restrictions to keep their domestic markets well supplied, tightening further the global market. More curbs are likely in the coming months as the rice market faces strong demand and lagging supplies, the US Department of Agriculture has warned. Global rice stocks are set to fall this year to about 70m tonnes, the lowest level in 25 years and less than half the 150m tonnes held in inventories in 2000.
At Tuesday’s auction, traders offered to sell the Philippines, the world’s largest rice importer, about 325,000 tonnes. The Philippines had hoped to buy 550,000 tonnes. Prices ranged from $618.50 to $745 per tonne, on average, 43 per cent higher than the $474.40 (£236.33, €309.11) per tonne paid in January. Thai rice prices, a global benchmark, last month broke above the $500-a-tonne level for the first time since 1989.
Gloria Macapagal Arroyo, the Philippine president, on Tuesday approved an incremental budget of 2.85bn pesos (£34m, $69m, €45m) to boost production of crops, mainly rice and corn, according to Arthur Yap, the agriculture secretary.
Amid fears of shortages, Manila took the unprecedented step last month of asking Vietnam to guarantee rice supplies of about 1.5m tonnes in a government-to-government deal.
But Vietnam said it would supply only about 1m tonnes, of which 700,000 tonnes represents previous contracts.
The Philippines could tap into regional emergency rice stockpiles to cover its imports requirements. The East Asian Emergency Rice Reserve, a scheme run by the Association of South-East Asian Nations (Asean), Japan, China and Korea, provides rice supplies to countries hit by disasters and other emergencies.
So far, the Philippines has ordered 876,700 tonnes of the commodity in the international market. “We’ll just have to try again and again until we meet our requirements,” said Mr Yap. “We are not chasing any price. Our aim is to ensure there’s enough supply.”
Local prices in the Philippines are already up 10 fold from a year ago.
Monday, February 11, 2008
Philippene Exports December 2007
Philippine exports grew at the fastest pace since August 2006 in December as shipments to China increased. Shipments abroad gained 21.4 percent from Deecember 2006 to reach $4.48 billion, according to preliminary figures released by the National Statistics Office in Manila today. Exports fell 2.1 percent in November.
Demand from China is supporting the Philippines and other Asian-exporting nations as shipments to the U.S. weaken. Exports account for about half of the Philippines $117 billion economy, which expanded at its fastest annual pace in 31 years in 2007.
Shipments to China gained 12.8 percent in December from a year earlier to $515.15 million. They dropped 12.4 percent a month earlier. Exports to Hong Kong rose 65 percent to $488 million, accelerating from a 28 percent gain in November.
Exports to the U.S., which is the Philippines' biggest market, grew by 7.7 percent to $725.4 million in December from a year earlier. Shipments to Japan, the No. 2 destination, were up 19.9 percent to $641.1 million.
Shipments of electronics, which make up two-thirds of the Philippines' total exports, climbed 12.3 percent from a year earlier to $2.54 billion. Exports of clothes declined 7.8 percent from a year earlier. Refined petroleum product sales jumped more than fourfold. Copper, gold and other mineral shipments increased 64 percent in December. Woodcrafts and furniture rose 25 percent.
Demand from China is supporting the Philippines and other Asian-exporting nations as shipments to the U.S. weaken. Exports account for about half of the Philippines $117 billion economy, which expanded at its fastest annual pace in 31 years in 2007.
Shipments to China gained 12.8 percent in December from a year earlier to $515.15 million. They dropped 12.4 percent a month earlier. Exports to Hong Kong rose 65 percent to $488 million, accelerating from a 28 percent gain in November.
Exports to the U.S., which is the Philippines' biggest market, grew by 7.7 percent to $725.4 million in December from a year earlier. Shipments to Japan, the No. 2 destination, were up 19.9 percent to $641.1 million.
Shipments of electronics, which make up two-thirds of the Philippines' total exports, climbed 12.3 percent from a year earlier to $2.54 billion. Exports of clothes declined 7.8 percent from a year earlier. Refined petroleum product sales jumped more than fourfold. Copper, gold and other mineral shipments increased 64 percent in December. Woodcrafts and furniture rose 25 percent.
Monday, February 4, 2008
Philippine Inflation on the Rise
Philippine inflation in January was at its highest level in over a year, which is likely to spell the end of the central bank’s accommodative monetary policy stance, analysts said on Tuesday. Annual consumer price inflation hit 4.9 per cent in January, well above the central bank’s forecast range of 3.7-4.4 per cent and a rapid acceleration from 3.9 per cent in December as food and fuel prices climbed.
Compared with December, prices rose 1.2 per cent in January, the biggest jump in more than three-and-a-half years.
Amando Tetangco, the country’s central bank governor, told reporters that monetary policy would take into account the latest price developments.
Only last week, the central bank cut its overnight borrowing rate by 25 basis points to 5 per cent, its lowest level since May 1992, and signalled it had room for more easing by describing price pressures as “manageable”.
Food prices soared in January, partly fuelled by the rising cost of rice, a staple in the Philippines that has to be imported as domestic harvests fail to keep pace with population growth.
The central bank expects a strong peso to moderate price pressures this year and keep average annual inflation between 3.5 and 4.4 per cent, within its target range of 3-5 per cent.
Inflation last year averaged 2.8 per cent, the lowest since 1986, helped by a 19 per cent surge in the peso against the dollar.
But the currency’s rise of nearly 2 per cent in January failed to stop prices rising. The whole of Asia is struggling with higher prices for energy and food due to tight supply and robust demand.
The peso weakened to 40.73 per dollar on Tuesday from Monday’s close of 40.68. The main stock index was down 1.07 per cent, tracking overnight losses on Wall Street.
Philippine dollar-denominated bonds were little changed from Monday’s levels. Bonds due in 2032 were quoted at 98.25/98.75 cents to the dollar and the 2031 bonds at 112.5/113, according to a Manila-based trader.
The central bank’s next rate meeting is on March 13. Last year, it cut rates four times by a total of 225 basis points.
Compared with December, prices rose 1.2 per cent in January, the biggest jump in more than three-and-a-half years.
Amando Tetangco, the country’s central bank governor, told reporters that monetary policy would take into account the latest price developments.
Only last week, the central bank cut its overnight borrowing rate by 25 basis points to 5 per cent, its lowest level since May 1992, and signalled it had room for more easing by describing price pressures as “manageable”.
Food prices soared in January, partly fuelled by the rising cost of rice, a staple in the Philippines that has to be imported as domestic harvests fail to keep pace with population growth.
The central bank expects a strong peso to moderate price pressures this year and keep average annual inflation between 3.5 and 4.4 per cent, within its target range of 3-5 per cent.
Inflation last year averaged 2.8 per cent, the lowest since 1986, helped by a 19 per cent surge in the peso against the dollar.
But the currency’s rise of nearly 2 per cent in January failed to stop prices rising. The whole of Asia is struggling with higher prices for energy and food due to tight supply and robust demand.
The peso weakened to 40.73 per dollar on Tuesday from Monday’s close of 40.68. The main stock index was down 1.07 per cent, tracking overnight losses on Wall Street.
Philippine dollar-denominated bonds were little changed from Monday’s levels. Bonds due in 2032 were quoted at 98.25/98.75 cents to the dollar and the 2031 bonds at 112.5/113, according to a Manila-based trader.
The central bank’s next rate meeting is on March 13. Last year, it cut rates four times by a total of 225 basis points.
Wednesday, January 30, 2008
Philippine GDP Q4 2007
The Philippine economy grew faster than expected in the fourth quarter, taking full-year growth to a 31-year high of 7.3 per cent and sowing some doubts about the size of monetary easing expected later on Thursday. Officials said the economy grew a seasonally adjusted 1.8 per cent in the final quarter of 2007 from the previous quarter. The figure came above a 1.7 per cent rise expected by analysts and pushed full 2007 growth well above the 7.0 per cent figure forecast in a Reuters poll.
The government maintained a 2008 growth target of 6.3-7.0 per cent despite the expected slowdown in the United States, the Philippines’ largest trading partner.
Expectations that the country’s growth momentum will carry forward well into 2008 made some analysts trim their expectations for the central bank’s policy meeting later on Thursday and bet on a 25 basis point interest rate cut rather than a steeper 50 basis point reduction.
Philippine interest rates are now at a 15-year low after four cuts last year, but markets expect the central bank to cut rates further to shield the economy from a global slowdown.
Inflation hit an 11-month high of 3.9 per cent last month, but the central has voiced confidence it will keep price growth within its 2008 target of 3-5 per cent.
An 8.7 per cent surge in annual output of the services sector, the highest in more than half a century, underpinned 2007 growth, officials said.
They said the economy grew by a revised seasonally adjusted 1.0 per cent in the July to September quarter. Compared with a year earlier, the economy grew 7.4 per cent in the fourth quarter.
”In an environment of benign inflation, low interest rates and a strong peso, the Philippine economy turned in its best performance in 31 years,” said Romulo Virola, the secretary-general of the National Statistics Coordination Board.
The actual growth data came at the upper end of the government’s most recent forecast of 6.7-7.8 per cent growth in the fourth quarter from a year earlier and 6.9 to 7.3 per cent full-year expansion in 2007.
Gross national product, swelled by money sent home by Filipinos working overseas, grew 6.5 per cent in the fourth quarter from a year earlier and 7.8 per cent in the full year, also a 31-year high.
The government maintained a 2008 growth target of 6.3-7.0 per cent despite the expected slowdown in the United States, the Philippines’ largest trading partner.
Expectations that the country’s growth momentum will carry forward well into 2008 made some analysts trim their expectations for the central bank’s policy meeting later on Thursday and bet on a 25 basis point interest rate cut rather than a steeper 50 basis point reduction.
Philippine interest rates are now at a 15-year low after four cuts last year, but markets expect the central bank to cut rates further to shield the economy from a global slowdown.
Inflation hit an 11-month high of 3.9 per cent last month, but the central has voiced confidence it will keep price growth within its 2008 target of 3-5 per cent.
An 8.7 per cent surge in annual output of the services sector, the highest in more than half a century, underpinned 2007 growth, officials said.
They said the economy grew by a revised seasonally adjusted 1.0 per cent in the July to September quarter. Compared with a year earlier, the economy grew 7.4 per cent in the fourth quarter.
”In an environment of benign inflation, low interest rates and a strong peso, the Philippine economy turned in its best performance in 31 years,” said Romulo Virola, the secretary-general of the National Statistics Coordination Board.
The actual growth data came at the upper end of the government’s most recent forecast of 6.7-7.8 per cent growth in the fourth quarter from a year earlier and 6.9 to 7.3 per cent full-year expansion in 2007.
Gross national product, swelled by money sent home by Filipinos working overseas, grew 6.5 per cent in the fourth quarter from a year earlier and 7.8 per cent in the full year, also a 31-year high.
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