Dec rate cut hinges on peso stability, US Fed move–analyst
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ESPITE inflation accelerating to 2.5 percent in November due to typhoons disrupting food supply, a 25-basis- point reduction in key policy rates in December is still possible, but hinges on the peso’s stability and the US Federal Reserve’s policy stance. In an economic brief, HSBC Asean economist Aris Dacanay said the November inflation print supports a rate cut during the Monetary Board’s meeting on December 19. However, “monitoring the Fed’s tone will be crucial.” The recent wave of typhoons plaguing the Philippines since September has damaged agricultural
TAAL TELLS A SMOKY TALE Taal Volcano remains restless, emitting occasional smoke days after its brief phreatomagmatic eruption last Saturday. On Sunday, December 8, 2024, the Philippine Institute of Volcanology and Seismology (Phivolcs) reported five volcanic tremors lasting three to five minutes each, signaling continued volcanic activity. JOEL C. PAREDES
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lands and tightened the food supply of local vegetables and meat, Dacanay said. This has pushed commodity prices higher in November, with inflation settling to 2.5 percent, quicker than the 2.3 percent recorded in October but slower than the 4.1 percent posted in November 2023. Food and nonalcoholic beverages inflation increased to 3.4 percent from last month’s 2.9 percent. Still, this was within the Bangko Sentral ng Pilipinas’ (BSP) month-ahead inflation expectation of 2.2 to 3 percent range for November. “The good news is that rice
prices have decelerated significantly, many thanks to lower rice tariff rates. Given how heavily weighted rice is in the Philippines’ consumer basket, headline inflation remained within the lower portion of the BSP’s target band,” Dacanay added. Moreover, Dacanay said the 5.2-percent economic growth, which surprised to the downside, still supports a possible rate cut in December. However, “the only upside risk to monetary policy is the currency,” Dacanay said, noting that the peso ranged between P58.5 and P59 levels over the course of November and even millimeters
away from breaching its historic highs on November 26. Dacanay said the seasonality of remittances will further support the appreciation of the peso, citing HSBC FX, now that the peso has appreciated against the US dollar at P58.23. “However, it will be key to monitor the tone of the Fed in the next two weeks. Any shift to a more hawkish rhetoric may introduce volatility in the currency and prompt the BSP to pause its easing cycle,” Dacanay said. Meanwhile, ANZ Research said it expects the BSP to reduce
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Monday, December 9, 2024 Vol. 20 No. 61
See “Rate,” A2
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END-NOV GIR DOWN TO $108.5B, BUT ‘ADEQUATE’ By Reine Juvierre S. Alberto
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HE Philippines’s lower gross international reserves (GIR), settling at $108.5 billion as of the end of November, remains more than adequate, according to the Bangko Sentral ng Pilipinas (BSP). Data from the BSP showed the GIR declined by 2.34 percent to $108.5 billion as of endNovember 2024 from the $111.1 billion recorded during the end of October 2024. The national government’s net foreign currency withdrawals from its deposits with the BSP—to settle foreign currency debt obligations and pay for its various expenditures—caused the month-on-month decrease. The BSP’s net foreign exchange operations and downward valuation of its gold holdings due to lower gold prices in the international market also contributed to the lowered GIR. Nevertheless, the BSP said the latest GIR level represents a “more than adequate external liquidity buffer equivalent to 7.8 months’ worth of imports of goods and payments of services and primary income.” The BSP noted that the GIR is viewed to be adequate if it can finance at least three months’ worth of the country’s imports of goods and payments of services and primary income. See “End,” A2
MAD DOGS, MERRY DEEDS For over 20 years, Mad Dog Philippines, known for their rugged appearance and powerful big bikes, have been quietly championing social outreach programs for their four chosen charity groups. On December 8, 2024, these bikers brought holiday cheer to children ahead of Christmas, distributing sacks of rice to the charities and gifts to 256 children of various ages. The gift-giving event was held in Makati City, highlighting their dedication to spreading joy whenever they can. NONIE REYES
PHL, 4 OTHERS SAW LESS TRADE RELIANCE ON CHINA–UNCTAD By Andrea E. San Juan @andreasanjuan
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IVE countries including the Philippines have become less dependent on China when it comes to trade in 2024, according to the United Nations Conference on Trade and Development’s (Unctad) Global Trade Update report. A report by the UN agency showed that the Philippines’s trade dependence on China slid by 2.4 percent this year compared to last year, the largest decline among the five countries that had reduced
trade dependence on the economic giant. Other countries with decreased trade dependence on China were Republic of Korea, -1.1 percent; United Kingdom, -0.6 percent; Vietnam, -0.6 percent and the United States with -0.4 percent. The trade body explained that the dependence of an economy on another is calculated as the ratio of their bilateral trade over the total trade of the dependent economy. See “PHL,” A2
Farm, fisheries share in GDP to decline in 2024–UA&P
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By Ada Pelonia
HE contribution of the agriculture and fisheries sector to the Philippine economy will decline this year, according to the University of Asia and Pacific Center for Food and Agribusiness (CFA). The CFA projected that the agriculture and fisheries sector’s full-year gross value added (GVA) may contract by 1 to 2 percent in 2024 due to the poor performance of the crops, livestock, and fishery sectors. “Overall, we see a 1 to 2 percent decline in the agriculture, forestry, and fishery sector this
year against a 1.2-percent growth in 2023,” CFA executive director Marie Annette Galvez-Dacul said in their recent year-end food and agribusiness conference. Based on the organization’s forecasts, the crops subsector’s GVA would decline by 3.5 percent in the second half, with its fullyear performance contracting between 3.5 percent and 4.5 percent. The livestock subsector is also projected to fall by 4.5 percent in the second half, with a full-year decline between 2.5 and 3.5 percent. See “Farm,” A2
PESO EXCHANGE RATES n US 58.0740 n JAPAN 0.3869 n UK 74.1024 n HK 7.4625 n CHINA 8.0041 n SINGAPORE 43.3777 n AUSTRALIA 37.4577 n EU 61.4888 n KOREA 0.0411 n SAUDI ARABIA 15.4617 Source: BSP (December 6, 2024)