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A broader look at today’s business Saturday, March 1, 2025 Vol. 20 No. 140
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TRADE GAP WIDENS BY NEARLY 17% IN JANUARY n
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ALDARINHO | DREAMSTIME.COM
‘STRONG DOLLAR TO WEAKEN PESO, MAKE GOODS COSTLY’
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By Bless Aubrey Ogerio
ESPITE the increase in export receipts, the country’s trade deficit widened in January, according to preliminary data from the Philippine Statistics Authority (PSA). Figures from the PSA showed that the trade gap in January expanded by 16.9 percent to $5.09 billion from last year’s $4.35 billion. This is a reversal of the 21.9-percent decline recorded in the same month in 2024. The January readout was also wider than the 0.8-percent decline recorded in December 2024. Exports climbed by 6.3 percent to $6.36 billion in January from last year’s $5.98 billion. The pace of growth, however, was slow-
er than the 10 percent recorded in 2024. Month-on-month, exports rebounded from the 1.9-percent decline in December 2024, when receipts reached $5.67 billion. “The commodity group with the highest annual increment in the value of exports in January 2025 was other manufactured goods with $188.36 million,” the PSA said. “This was followed by coconut oil with an annual increase of $110.88 million, and other min-
TOP TRADE PARTNERS EXPORTS USA (17.7%) JAPAN (14.9%) HK (11.4%) CHINA (10.1%) SINGAPORE (4.2%) IMPORTS CHINA (28.9%) JAPAN (8%) INDONESIA (7.8%) S. KOREA (7.5%) USA (6%)
eral products with an annual increment of $61.51 million.” Meanwhile, the country’s import payments rose by 10.8 percent to $11.45 billion in January from
the previous year’s $10.34 billion. This recovery follows consecutive contractions of 1.5 percent in December 2024 and 6 percent in January of last year. “In January 2025, the commodity group with the highest annual increment in the value of imported goods was electronic products with $312.62 million,” the agency noted. “This was followed by telecommunication equipment and electrical machinery, which increased by $126.38 million, and mineral fuels, lubricants and related materials with an annual increment of $107.56 million,” it added. The United States remained the country’s top export destination, accounting for $1.13 billion or 17.7 percent of total shipments. It was followed by Japan ($945.80 million, 14.9 percent), Hong Kong ($722.81 million, 11.4 percent), Continued on A2
BSP: Feb inflation falls within target range By Reine Juvierre S. Alberto
tural commodities, such as fish and meat, were seen as upward price pressures. Meanwhile, lower prices of rice, fruits and vegetables, as well as negative base effects, are expected to offset the rise in prices. BSP’s inflation outlook is within the government’s target of 2 to 4 percent. “Going forward, the Monetary Board will continue to take a measured approach in ensuring price stability conducive to balanced and sustainable growth of the economy and employment,” the BSP said.
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NFLATION in February likely fell within the target range of the government, according to economists and the Bangko Sentral ng Pilipinas (BSP). Economists and the BSP also expect the consumer price index to accelerate at a steady pace for the rest of the year. In its month-ahead forecast, the BSP projected that inflation settled within the range of 2.2 percent to 3 percent in February. The Philippines recorded an inflation rate of 2.9 percent in January 2025 and 3.4 percent in February 2024. Meanwhile, fullyear inflation was at 3.2 percent in 2024. The BSP said higher electricity rates and oil prices, and an increase in the prices of key agricul-
Soft inflation print
A DELIVERY man carries sacks of rice on his head at a market in Pasig City on Thursday. Economists and the Bangko Sentral ng Pilipinas (BSP) expect inflation in February to have eased within the government’s target range of 2 to 4 percent, citing lower rice prices as a key factor. However, higher electricity and oil prices remain inflationary pressures. BERNARD TESTA
MEANWHILE, ANZ Research expects inflation to have eased to 2.8 percent in February as food inflation likely softened. The think tank said rice prices eased and meat and vegetables stabilized.
THE PESO’S PREDICAMENT PESO DEPRECIATION FORECAST: n Projected to fall to P61 per $1 in 2025 n Current level: P57.91 per $1 n Driven by a strong dollar environment EFFECT ON GOODS & INFLATION: n A weaker peso makes imports more expensive n Inflation to settle at 3.1% (within 2-4% target) n Fast depreciation could increase inflation’s pass-through effect BSP & US FED POLICY: n BSP expected to cut rates by 50-75 bps this year n Key policy rate at 5.75% n Rate cut timing crucial to avoid excessive peso weakening n BSP expected to stay in sync with the US Fed
PIXBOX | DREAMSTIME.COM
AN airplane view of Manila showcases the capital’s bustling landscape, including Manila Bay, the port, ships, Pasig River, and towering buildings beneath a cloud-dotted sky. Despite a rise in export receipts, the country’s trade deficit widened to $5.09 billion in January, as import payments outpaced export growth, according to preliminary data from the PSA. PAMELA LICO VIA DREAMSTIME.COM
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HE Philippine peso is seen to depreciate to P61 against the greenback this year due to a strong dollar environment, according to economists from Sun Life Investment Management and Trust Corp. (SLIMTC). SLIMTC also noted that sharp depreciations of the peso could increase the cost of goods. “Peso will weaken and will be in the range of 58-61 this year because of a very strong dollar environment globally,” SLIMTC Chief Investment Officer Ritchie Teo said in a press briefing on Friday. Inflation, meanwhile, will settle at 3.1 percent this year, well within the government’s target of 2 to 4 percent, Teo said. Despite the projection that the peso, which closed at P57.91 to the dollar on Tuesday, will underperform, SLIMTC President Michael Enriquez said the “biggest worry” is how fast the peso depreciates as this could have a stronger pass-through effect on inflation.
“As long as the depreciation is slow and steady, I think it should not really affect inflation too much as opposed to wild swings on the peso,” Enriquez told reporters. However, since the Philippines is a highly import-dependent country, a weaker peso could still make the price of goods more expensive, he added. The Bangko Sentral ng Pilipinas (BSP) should be in lockstep with the United States Federal Reserve actions and not get ahead of the Fed. The BSP is projected to reduce key policy rates by 75 basis points (bps) this year, delivering a 25-bps cut each thrice. However, a 50-bps reduction is SLIMTC’s base case. A rate cut is also possible in April and the second one would be after the Fed, according to Teo. If “extreme tariff measures” were imposed and pushed inflation higher, this might prompt the BSP to hold rates again and prioritize flexibility. “So if the Fed would be on pause, then the BSP will also have some leeway to pause because that would affect the interest rate differential, the peso weakness versus the dollar,” Teo said. “Moreover, if the BSP cuts ahead of the Fed, the natural effect would be a weaker peso given that the interest rate differential gets lower,” he added. The key policy rates stood at 5.75 percent, while inflation settled at 2.9 percent in January. “There’s really some room but the flexibility is very important. It’s still prudent to have that flexibility on hand,” Teo said. Reine Juvierre S. Alberto
Continued on A2
PESO EXCHANGE RATES n US 57.8970 n JAPAN 0.3865 n UK 72.9734 n HK 7.4443 n CHINA 7.9453 n SINGAPORE 42.9376 n AUSTRALIA 36.0872 n EU 60.2129 n KOREA 0.0399 n SAUDI ARABIA 15.4379 Source: BSP (February 28, 2025)