Recession risk could blunt impact of high oil price
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HE threat of recession could mitigate the impact of high oil prices due to output cuts on Philippine inflation, according to local economists. Oil-producing countries such as Saudi Arabia and Iraq announced that they will cut oil production by a total of 1 million barrels per day starting in May 2023 until the end of the year. Saudi Arabia alone is expected to account for the reduction of 500,000 barrels a day during the period. Reports said this accounts for less than 5 percent of the country’s average
production per day as of 2022. “It will likely increase oil and commodity prices in the future, but I don’t think the worries over a global recession will subside soon so that oil and commodity price increases may not be sustained,” University of Asia and the Pacific (UA&P) economist Peter Lee U told the BusinessMirror on Monday. Ateneo de Manila University Department of Economics Chairperson Alvin P. Ang agreed and said that in the short term, especially if the 6-percent increase in oil prices is sustained, this could feed into inflation.
However, Ang said actual demand is slowing. He added that countries like the United States still have “strategic reserves” that could cushion the impact on global pump prices. Nonetheless, certain economists such as University of the Philippines Diliman School of Economics head of research Renato E. Reside Jr. believe there will be an impact on the country’s inflation rate and growth prospects. “It’s going to feed further into current inflation and inflation expectations. It is a threat to both inflation and growth, not just in the second
quarter. This may also affect the trajectory of future policy rate increases both in the US and here,” Reside said. However, one good news is that Overseas Filipino Workers (OFWs) in the Middle East who are employed in “essential professions” could benefit from the increase in oil prices. “The OFWs from oil rich countries will benefit. Other OFWs are in essential professions,” Reside said. “They are employed in countries that will become richer since they sell oil to the rest of the world.” Continued on A5
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MANUFACTURING GROWS
AT SLOWEST IN 7 MOS
CARVERS AT WORK (From left) Women woodcarvers are busy with their craft at the Angels Woodworks workshop in Paete, Laguna, proclaimed “the Carving Capital of the Philippines” in 2005 by President Gloria Macapagal-Arroyo: Proprietor Cristina Dela Rosa, 63, puts a hole in the eyes of an unfinished Virgin dela Rosa; Lourdes Maldecantos, 54, puts finishing touches to an image of Jesus Christ; Merlina Hedia, 71, cleans an oversize image of the Virgin Mary. BERNARD TESTA
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By Cai U. Ordinario
@caiordinario
HE country’s manufacturing sector continued to be in expansion mode but registered its slowest growth in seven months, according to the latest report from Standard & Poor’s (S&P) Global.
Based on the latest Purchasing Managers’ Index (PMI) report, the Philippines’s PMI slowed to 52.5 in March. This remains above the 50-mark that indicates the manufacturing sector continues to expand. However, S&P data showed the country’s PMI is slightly slower compared to 52.7 in February 2023 and 53.2 level posted in March 2022. “Operating cond itions improved at the slowest pace in seven months, partly due to the softer rise in production and stocks of purchases, and with a second month of job shedding weighing on the headline index,” Maryam Baluch, Economist at S&P Global Market Intelligence, said. The report said the upturn in production was largely underpinned by the strong upturn in new orders. Firms noted that a stronger demand environment, new projects and a broader clientele helped boost sales.
However, the data showed that foreign demand increased at a slower pace, leading the data for March to see a slower increase. According to the report, goods producers raised their purchasing activity in March in order to support growth in new orders and mitigate against future hikes in costs. However, the pace of growth eased from January’s recent high as high input prices deterred some goods producers. “Despite a slight slowdown, March data revealed pressures on inflation and supply chains easing. Operating expenses rose at the slowest pace in 27 months, while the incidence of delays was among the weakest since the current sequence of deterioration in vendor performance began in August 2019. Business confidence across the sector remained upbeat, as strong demand conditions buoyed optimism in the outlook for future output,” Baluch said.
‘AMBULANCE CHASING, NOT EMSA, IMPERILS JOBS OF SEAFARERS’ By Malou Talosig-Bartolome
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HE European Commission may have secured the jobs of 50,000 Filipino seafarers, but there are still risks the maritime industry must address and which may affect around 90,000 more Filipino seafarers in the next three years. While the Philippine government obtained the conditional nod of the Europeans, “ambulance chasing” in the Philippines and decarbonization of ships will likely affect the job prospects for Filipino seafarers and the Philippine economy as well. Of the 2 million seafarers all over the world, the Philippines account for 14.4 percent. Although it is still the number 1 supplier of seafarers all over the world, this percentage is already lower than the 20 percent share the Philippines enjoyed for the past years. “As you can see, there has been a decline in the number of Filipino seafarers and ambulance chasing is one of those reasons,” Helio Vicente, Senior Manager for Policy and Employment Affairs of the International Chamber of Shipping, said
in a press conference initiated by the Department of Migrant Workers (DMW). Vicente said they expect a further shortfall of supply of 90,000 Filipino seafarers in the next three years. “In our latest report published in 2021, we expect a shortfall of around 90,000 by around 2026. So the industry must significantly increase training and recruitment levels to avoid shortage of labor supply in 2026,” he said. Ambulance chasing in the maritime industry refers to the practice of Filipino lawyers or their agents who actively pursue seafarers who have been victims of accidents or have labor problems, prodding them to file civil suits and get the biggest settlement possible. Francesco Gargiulo, chief executive officer of International Maritime Employers’ Council (IMEC), quoted a study by an international group of protection and indemnity insurance that showed shipowners have paid US$34 million (P1.7 billion) to Filipino seafarers after losing cases in Philippine lower courts over a period of time.
ERC to Meralco, SMC power units: Don’t end PSAs yet By Lenie Lectura @llectura
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HE Energy Regulatory Commission (ERC) has ordered the Manila Electric Company (Meralco) and two units of San Miguel Global Power Holdings Corp. to not terminate their power supply agreements (PSAs) until the parties can fully comply with the ERC rules and until the agency has acted on
their joint application. “The applicants are reminded to refrain from taking any action implementing any termination until the Commission has acted on any appropriate pleading that may be filed by the applicants seeking specific reliefs relative to the notice of termination,” said the ERC in its seven-page order promulgated last March 30 and posted on its website on Monday. See “ERC,” A2
See “Ambulance,” A2
Continued on A5
PESO EXCHANGE RATES n US 54.3180 n JAPAN 0.4075 n UK 66.9741 n HK 6.9198 n CHINA 7.9014 n SINGAPORE 40.8099 n AUSTRALIA 36.2953 n EU 58.9296 n KOREA 0.0416 n SAUDI ARABIA 14.4674 Source: BSP (April 3, 2023)