Exports, imports must grow 10% to meet goals
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HE Philippines’s full year export and import growth targets may still be attainable if the country’s external trade performance posts a double-digit growth in the next six months, according to local economists. On Tuesday, the Philippine Statistics Authority (PSA) said the country’s export earnings contracted 9.3 percent in the first semester of 2023 while import receipts declined 8 percent during the period. The country’s full year target, according to the latest pronouncement f rom t he Development Budget Coordination Committee (DBCC), is to grow exports by 1 percent and imports by 2 percent this year.
“Mat hemat ica l ly, bot h e xports and imports need to grow by more than 10 percent for the rest of 2023 to achieve the said targets,” Rizal Commercial Banking Corporation (RCBC) Chief Economist Michael L. Ricafort told the BusinessMirror. In June 2023, exports managed to post a growth of 0.8 percent while imports contracted 15.2 percent during the period. Exports grew 2.4 percent while imports contracted 8.1 percent in May 2023. Ricafort said this partly reflects the “risk of recession in the United States and softer economic conditions/recovery in China.” However, he said the country’s external trade targets remain attainable.
“United States Federal Reserve Chair [Jerome] Powell already signaled recently that the Fed staff are no longer forecasting [a] US recession,” Ricafort said. “So global trade, including Philippine exports and imports, could pick up.” De La Salle University economist Maria Ella Oplas said a double-digit growth in exports and imports would be attainable because of the national government ’s publ ic i nf ra st r uc t u re program. Another factor seen boosting the country’s external trade performance is higher household consumption driven by the holiday season. “We are about to enter the ‘ber’ months [when] demand is heightened during those
times. We should expect a kick in trade,” Oplas said.
June performance
PSA said the country’s total external trade in goods amounted to $17.32 billion, which indicates an annual decline of 9.6 percent from its level of $19.17 billion in the same period of the previous year. In May 2023, its annual decrease was recorded at 4.4 percent, while in June 2022, it expanded at an annual rate of 16.3 percent. Of the total external trade in June 2023, PSA said 61.3 percent were imported goods, while the rest were exported goods. The balance of trade in goods See “Exports,” A2
BusinessMirror A broader look at today’s business
PHL END-JULY GIR HITS $99.7B ON PRICIER GOLD www.businessmirror.com.ph
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Wednesday, August 9, 2023 Vol. 18 No. 296
P25.00 nationwide | 2 sections 26 pages | 7 DAYS A WEEK
By Cai U. Ordinario @caiordinario
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N increase in the value of the country’s gold holdings allowed the country’s Gross International Reser ves (GIR) to bounce back after posting two consecutive months of decline, according to data released by the Bangko Sentral ng Pilipinas (BSP). The country’s GIR level, based on preliminary data, rose to $99.7 billion as of end-July 2023 from the end-June 2023 level of $99.4 billion. Based on the data, the value of gold held by the Philippines reached $10.3 billion, the highest since the end-2020 figure of $11.61 billion. “The month-on-month increase in the GIR level reflected mainly the upward valuation adjustments in the value of the BSP gold holdings due to the increase in the price of gold in the international market,” BSP said. “[The increase in GIR was also a result of] the BSP’s net foreign exchange operations, net income from the BSP’s investments abroad, and the National Government’s [NG] net foreign currency deposits with the BSP,” it added. The BSP said the GIR as of endJuly represents a more than adequate external liquidity buffer equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income. It added that the GIR is also 5.9 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity. Short-term debt, BSP said, is based on residual maturity which refers to outstanding external debt with original maturity of one year or less, plus principal payments on medium- and longterm loans of the public and private sectors falling due within the next 12 months. The level of GIR, as of a particular period, is considered adequate if it provides at least 100-percent cover for the payment of the country’s foreign liabilities, public and private, falling due within the immediate 12-month period. See “GIR,” A2
WATER ATTACK DRAWS FIRE Footage of a Chinese Coast Guard ship using a water cannon against a Filipino resupply vessel is shown during a news conference at the Department of Foreign Affairs in Manila on Monday, August 7, 2023. The Philippine government summoned the Chinese ambassador on Monday to convey a diplomatic protest over the incident, but the incident, coming days after China pitched the idea of joint patrols and nearly a month since former President Rodrigo Duterte’s Beijing trip, continues to roil Philippine authorities. See related story on A3, AFP mulls over another resupply run for troops manning BRP Sierra Madre. EZRA ACAYAN/POOL PHOTO VIA AP
INTEREST PAYMENTS DECLINING STEADILY: DOF By Jasper Emmanuel Y. Arcalas @jearcalas
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HE Department of Finance (DOF) said the national government’s interest payments (IP) has been declining since the return of the country’s democracy, allowing the state to bankroll other priority programs. In a statement, the DOF said the share of interest payments, which account for the bulk of the national government’s debt
service, to the state’s total expenditure was down to an average of 10.1 percent from 2016 to 2022 from an average share of 23.3 percent from 1986 to 2015. “For 2024, the allocation for interest payments is only 11.6 percent or P670.5 billion of the 2024 budget. This allows us to spend more on socioeconomic programs and projects in our priority sectors such as education and infrastructure,” Finance Secretary Benjamin E. Diokno said.
The allotted IP for 2024, however, is higher by nearly P60 billion than the P610.665billion amount allocated for this year, based on the 2024 Budget of Expenditures and Sources of Financing (BESF). Diokno reiterated that the principal amortization of debt is not included in the national government’s expense item since it is not classified as an expenditure. See “DOF,” A2
Amnesty bill lapses into law, estate-tax payers get respite By Jovee Marie N. Dela Cruz @joveemarie
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EARLY a million households was given time to arrange their finances after the proposed Estate Tax Amnesty Extension bill lapsed into law as Republic Act (R A) 11956 last Saturday. According to House Committee on Ways and Means Chairman Ma. Jose Clemente “Joey” S. Salceda, RA 11956 will benefit some
920,000 Filipino families who have unsettled estates, many of whom include the 610,054 agrarian reform beneficiaries recently released from debt by the New Agrarian Emancipation law. The latter, RA 11953, is a bill passed by the 19th Congress of the Philippines and signed by President Ferdinand R. Marcos Jr. on July 7 this year. RA 11956 extends the estate tax See “Estate tax,” A2
PESO EXCHANGE RATES n US 55.7430 n JAPAN 0.3913 n UK 71.2563 n HK 7.1403 n CHINA 7.7483 n SINGAPORE 41.5807 n AUSTRALIA 36.6232 n EU 61.3507 n KOREA 0.0426 n SAUDI ARABIA 14.8609 Source:
BSP (8 August 2023)