Q2 growth could lead BSP to keep rates
T
THE WORLD | A10
UKRAINE CLAIMS CONTROL OF RUSSIAN TERRITORY IN SURPRISE INCURSION, EMBARRASSING KREMLIN
HE country’s most recent econom ic per for m a nce could create room to maintain key policy rates, according to the Governor of the Bangko Sentral ng Pilipinas (BSP). The Philippine Statistics Authority (PSA) said the country’s GDP growth reached 6.3 percent in the April to June period this year. (See: https://businessmirror. com.ph /2024/08/09/6-3-q2growth-buoys-hope-for-f ullyear-goal/) However, BSP Governor and Monetary Board Chairman Eli M. Remolona Jr. said the country’s
GDP growth data is just one data point that the monetary authorities will consider on Thursday. “6.3 [percent], maganda yun, eh [that’s good]. There’s more room to stay tight pero maraming factors yan, eh [but there are many factors to consider],” Remolona said on the sidelines of Tuesday’s budget hearing at the Senate of the Philippines. “[Unlike the] US medyo mahina yung economy nila, parang mas inclined sila mag-ease [their economy is rather weak, so they’re inclined to ease]. Pero it’s just one number, eh. Yung ibang number ng GDP mahina. Titignan namin lahat yan, siy-
empre [But that’s just one number. Some components of the GDP are weak. Of course we will look at all of those],” he added. The components that make up the country’s GDP growth include the growth of household final consumption expenditure (HFCE). Based on the Philippine Statistics Authority (PSA), growth remained at 4.6 percent, which, outside of the pandemic, is the slowest rate in 14 years. Apart from this slow growth, analysts noted that GDP growth i n t he s e c o nd q u a r t e r w a s mainly driven by base effects.
(See: https://businessmirror. com.ph/2024/08/13/analystsphl- g row th-ma i nly- a- ba seeffect/) “We look at other components, our models take account of different components of GDP,” Remolona said, partly in Filipino. “It [consumption growth] helps [maintain rates for now].” The BSP is currently on its “quiet period” as the Monetary Board is set to meet on Thursday. This period is observed for seven calendar days prior to the scheduled See “BSP,” A
A broader look at today’s business Q
www.businessmirror.com.ph
Wednesday, August 14, 2024 Vol. 19 No. 302
P. nationwide | sections pages | 7 DAYS A WEEK
MAY ‘24 FDI SHRINKS TO LOWEST IN 16 MONTHS T By Cai U. Ordinario @caiordinario
HE country’s foreign direct investments (FDI) contracted in May 2024 and posted its lowest performance in 16 months, according to the latest data released by the Bangko Sentral ng Pilipinas (BSP). The BSP reported that FDI inflows reached $499 million in May 2024, the lowest since the $478 million posted in January 2023. This also represented a 1-percent contraction compared to the $504-million net inflows recorded in May 2023. However, FDIs reached $4.024 billion in January to May 2024, or 15.8 percent higher than the $3.475 billion posted in the same period last year. “[It is] still wait-and-see if net FDI inflows would revert...to prepandemic levels in the coming months; as any pick up/improvement in FDI data later in 2024 could be fundamentally supported by the possible local policy rate [cuts],” Rizal Commercial Banking Corporation (RCBC) Chief Economist Micheal L. Ricafort said. Ricafort said the first 25-basispoint rate cut will likely be done in the third quarter of 2024. In
total, the expectation is for the BSP to reduce policy rates by 50 basis points this year. This reduction in policy rates, Ricafort said, is fueled by expectations that inflation will slow due to lower tariffs on rice as well as the 25-basis-point reduction in interest rates by the United States Federal Reserve. Apart from these, he said, the country still enjoyed the fastest growth in the Asean. The local economy also remains a “bright spot” for jobs/employment, business activities, and other economic opportunities. “For the coming months, possible cuts in the US/global/local policy rates later in 2024 and in 2025, especially if inflation remains well anchored within inflation target of the central bank, could also lead to further pick up/ See “FDI,” A
HOUSE PANEL GIVES MERALCO 25YR FRANCHISE RENEWAL By Jovee Marie N. Dela Cruz @joveemarie
T
HE House Committee on Legislative Franchises has endorsed for plenary approval the bill granting Manila Electric Co. (Meralco) a new 25-year franchise to distribute electricity in an area that accounts for more than half of the country’s gross domestic product, which a lawmaker says is a “signal to capital-intensive businesses.” Parañaque Rep. Gustavo
DOUBLEGOLD medalist Carlos Yulo and bronze medalist Nesthy Petecio acknowledge cheers from welcomers Tuesday night as the Philippine contingent to the 2024 Olympics arrived from Paris at the Villamor airbase. The athletes then proceeded to Malacanang Palace, where they were welcomed by the First Family. President Ferdinand Marcos Jr. announced the grant of an additional P2 million in incentives for each of the Olympians. NONOY LACZA
Tambunting, the panel chairman, said the franchise of Meralco was approved on Mond ay fol low ing strong backing from both lawmakers and the business community. “For the past few months, we have held meetings to discuss the franchise application of Meralco. Since then, we have received various letters of support,” said Tambunting, referencing nearly two dozen business groups, including industry federations and the See “Meralco,” A
Peso closes at ₧56.96 to $, strongest level since April
T
HE Philippine peso rallied against the United States dollar on Tuesday, allowing it to close at its strongest level since April this year, which augurs well for the country’s aspirations of becoming an Upper Middle Income Country (UMIC). Based on Bankers Association of the Philippines (BAP) data, the peso closed at P56.96 to the greenback, the strongest since the P56.808 level recorded in April 15, 2024. In his speech at the Senate panel review of the economic and fiscal assumptions underpinning the budget, Socioeconomic Planning Secretary Arsenio M. Balisacan
said keeping the peso at the P56 to P58 to the US dollar will improve the country’s chances of reaching UMIC status. “Meeting the low end of the [growth] target will keep the country on track to becoming an uppermiddle-income country [UMIC] by 2025, provided that the other macroeconomic targets are also achieved,” Balisacan said. “The average foreign exchange rate during the period does not exceed P58 to USD 1. Otherwise, reaching the upper-middle-income status could be delayed to 2026,” he also said. See “Peso,” A
PESO EXCHANGE RATES Q US 57.3270 Q JAPAN 0.3895 Q UK 73.1951 Q HK 7.3581 Q CHINA 7.9905 Q SINGAPORE 43.2983 Q AUSTRALIA 37.7498 Q EU 62.6813 Q KOREA 0.0419 Q SAUDI ARABIA 15.2717 Source:
BSP 13 August 2024