Amro trims growth forecast as it flags risks to PHL By Cai U. Ordinario @caiordinario
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LOWER private consumption amid rising inflation and a weak peso, as well as weak growth in major trading partners were identified by the Asean+3 Macroeconomic Research Office (Amro) as short- and medium-threats to the country’s economic performance. As a result, Amro reduced its GDP growth forecast for the Philippines to 5.8 percent this year from the initial estimate of 6.1 percent. However, Amro retained its 6.3 percent outlook for 2025. “Higher costs of basic needs would further reduce households’ ability to afford discretionary items and hence constrain household con-
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sumption. The upside risks of high inflation could increase if there were to be a sharp depreciation of the peso caused by external shocks,” Amro said. “A slowdown in major trading partners, such as the US, Europe and China, could pose negative spillovers to the Philippine economy through their impacts on merchandise and services trade, tourist arrivals, overseas remittances and foreign investment inflows,” it added. Apart from these risks, Amro noted that geopolitical risks could also threaten growth in the shortand medium-term. Amro said the escalation of disputes in the West Philippine Sea is ex pected to reduce trade, investment and
tourist arrivals from China. Amro said the geopolitical tensions in other regions, such as Ukraine and the Middle East, would lead to supply shocks, like sharp spikes in commodity prices and shipping costs. “The persistent and intensified geopolitical tensions between China and the US could lead to global economic fragmentation, causing substantial uncertainties and eroding market sentiments, which would adversely affect f o r e ig n i nvest ment s i n t he re g ion ,” A m ro s a id . “Nevertheless, the Philippines’s closer ties with the US and other advanced economies may bring opportunities in terms of higher trade and FDIs,” it added.
Slow pace of easing
FURTHER, Amro said a slower pace of monetary easing by the United States Federal Reserve can also create uncertainties, particularly next year. This would lead to a further depreciation in the Philippine peso. However, slower monetary policy easing in the US would tend to benefit Philippine government bond yields which are correlated with US Treasury yields. The Amro also noted that the transmission of monetary policy in the Philippines remained challenged. The think tank said “only half of the total change was reflected in the actual bank lending rate.”
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TYPHOONS DIM HOPES OF 7% GDP GROWTH T
By Reine Juvierre Alberto
HE Cabinet-level Development Budget Coordination Committee (DBCC) tempered its growth outlook for the country after a series of typhoons battered the Philippines in recent months.
On Monday, the DBCC said the Philippines will miss its goal of growing by 7 percent by yearend, prompting economic managers to adjust their outlook for 2024 to 6 percent to 6.5 percent, from the previous 6 percent to 7 percent. “Naturally, it’s already December 1 so I don’t think that the economy [will grow] 7 percent this year,” Finance Secretary Ralph G. Recto said, noting that a 6 percent growth is “more realistic.” The country’s economic growth slowed to 5.2 percent in the third quarter from a strong 6.4 percent in the second quarter and 6 percent in the third quarter of 2023. However, the country’s economic managers said they remain optimistic about achieving the DBCC target for the year and expect GDP to bounce back in the last quarter due to an anticipated increase in holiday spending, continued disaster recovery efforts, low inf lation and a robust labor market. For 2025 to 2028, the DBCC widened the growth outlook band
to 6 percent to 8 percent from 6.5 percent to 7.5 percent. “There’s so much uncertainty. We thought it best to widen the band to a low of 6 percent to a high of 8 percent,” Recto said. To achieve this target, DBCC Chairperson and Budget Secretary Amenah F. Pangandaman said the government will implement reforms to accelerate infrastructure investments, enhance the ease of doing business and boost national competitiveness, such as the recently enacted CREATE More Act. The inflation forecast for 2024 was also lowered to 3.1 percent to 3.3 percent from the previous 3 percent to 4 percent. “We are determined to maintain price stability by keeping inflation low and stable amid easing monetary conditions, improving labor market conditions a nd product iv it y- en ha nc ing structural reforms,” the DBCC said. Moreover, the Philippine peso is expected to remain stable at an See “Typhoons,” A2
PHILHEALTH: WE CAN SUSTAIN MEMBER BENEFITS AMID CUTS
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TATE-RUN Philippine Health Insurance Corporation (PhilHealth) remains optimistic that it can sustain members’ benefits despite Congress slashing its budget by more than half of what it requested. In a briefing on Monday, PhilHealth President and Chief Executive Officer Emmanuel R. Ledesma Jr. said the health insurer is “very well prepared” for what both the Senate and House of Representatives decide on. “Kahit anong ibigay nila, kahit anong decision nila, [Whatever they give us, whatever their decision is,] we will always find a way
to make it work,” Ledesma said. PhilHealth proposed a budget of P150.92 billion in 2025, which includes coverage for 25.58 million indirect contributors. The Senate reduced PhilHealth’s budget to P74 billion while the House decreased it to P68 billion. “Congress’s refusal to provide sufficient premiums for PhilHealth contributors is a clear violation of the constitutional right to health,” Sin Tax Coalition said in a statement on Monday. “PhilHealth’s budget utilization See “PhilHealth,” A2
COUNT ON IT: ACM GETS AN UPGRADE: A Commission on Elections employee demonstrates the automated counting machine (ACM) for the May 2025 midterm polls, highlighting its new features. The Comelec roadshow caravan, initiated by the poll body to help orient the public with the 2025 machines and procedures, kicked off on Monday, December 2, 2024, at Manila High School in Intramuros, Manila. NONIE REYES
IT-BPM, retail unfazed by Trump protectionist policies By Andrea E. San Juan @andreasanjuan
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HE Philippine IT and Business Process Management (IT-BPM) industry and the retailers’ group are unfazed by protectionist policies that may be implemented by President-elect Donald Trump. “The Philippine IT-BPM industry has consistently demonstrated its resilience and adaptability to global changes, and I am confident this will continue,” IT and Business Process Association of the Philippines (Ibpap) President Jack Madrid told the BusinessMirror in an e-mail. In fact, Madrid said, external policies and geopolitical move-
ments “challenge us to innovate, upskill, and fortify our value proposition.” “The future of the Philippine IT-BPM sector is not dictated by any single administration or policy. It is built on the enduring strengths of our people and our ability to adapt to change,” added Madrid. The Ibpap head maintained that demand for “high-quality, technology-enabled services remains unwavering.” “Companies worldwide rely on the efficiency and scalability that outsourcing offers and this demand transcends political climates,” Madrid underscored. See “IT-BPM,” A2
PESO EXCHANGE RATES n US 58.6020 n JAPAN 0.3916 n UK 74.6589 n HK 7.5314 n CHINA 8.0853 n SINGAPORE 43.7851 n AUSTRALIA 38.1499 n EU 61.9482 n KOREA 0.0420 n SAUDI ARABIA 15.6001 Source: BSP (December 2, 2024)