Consumption spending could boost Q2 growth
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ISRAELI AIRSTRIKES KILL 37 PALESTINIANS, MOST IN TENTS, NEAR RAFAH AS OFFENSIVE EXPANDS
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RECOVERY in consumption spending driven by slower inflation and cheaper interest rates could provide a muchneeded boost to the country’s second-quarter economic performance, according to a local think tank. In its latest Market Call report, First Metro Investment Corp.-University of Asia & the Pacific (FMICUA&P) Capital Market Research expects GDP growth to average 5.9 percent in the second quarter. This is an improvement from the 5.7-percent GDP growth posted in the first three months of the year. The slower growth was largely due to Household Final Consumption
Expenditure (HFCE), which posted a growth of 4.8 percent, the slowest in 14 years sans the pandemic. (See: www.businessmirror.com.ph/2024/ 05/10/spending-cutbacks-to-continue-say-experts/)
“Moving forward, we don’t see a repeat of [the] Q1 [first quarter] downbeat. High employment levels, likely heightened government spending [less saddled by interest payments] and peaking inflation in Q2 [second quarter] should spur more domestic demand,” FMICUA&P Capital Market Research said. “We project a mild acceleration in GDP growth to 5.9 percent in Q2 [second quarter], but pace will like-
ly hasten in H2 [second semester] to bring full year GDP growth to 6 percent with a slight upside bias,” it also said. The local think tank expects rice prices to slide by 1 percent on a month-on-month basis while crude oil prices are expected to decline by 7 percent in May 2024. Rice inflation on a month-onmonth basis slowed to 0.4 percent, while on a year-on-year basis, it slowed to 23.9 percent in April. In March, rice prices increased 1 percent on a month-on-month basis and 24.4 percent on a year-on-year basis. The local think tank also pointed out that while the trade deficit is
expected to “remain elevated,” the widening of the export-import gap will be more modest in the second half of the year. However, FMIC-UA&P Capital Market Research said this, along with the strong US dollar, will continue to put upward pressure on the Philippine currency. On Wednesday, the peso closed again at the P58 to the dollar level. “The FX weakness improves the domestic production outlook as well, and so we see a slight acceleration of GDP expansion in Q2 [second quarter] to nearly 6 percent and full-year growth to slightly above 6
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‘HIGH FOR LONG’ RATES, FOOD AND FUEL TRACKED By Cai U. Ordinario @caiordinario
HE Financial Stability T Coordination Council (FSCC) is closely monitoring “high for long” global interest rates and expensive food and fuel as these could affect debt servicing and the country’s economic growth. In a statement on Wednesday, FSCC Chairman and Bangko Sentral ng Pilipinas (BSP) Governor Dr. Eli M. Remolona Jr. said this despite “reassuring indicators” that point toward the country’s efforts to have greater control over its macro-financial path. “The volatility in the price and supply of energy-related products can affect economic activity, while a high-for-long global interest rate situation will weigh on debt servicing in general. These are issues that the FSCC will closely monitor and may address in due course if warranted,” Remolona said. The FSCC is an interagency council composed of the BSP, the Department of Finance, the InsuSee “Rates,” A
ECONOMIC GLOW
The illuminated Makati skyline, with its skyscrapers, symbolizes a positive outlook. Recent reports indicate that the Philippines has achieved a remarkable feat by swiftly transitioning from a deficit to a surplus in its fiscal position within just one month. This improvement in the government’s financial management serves as a beacon of stability and strength for the economy. NONIE REYES
GOVT TO LOSE P10-B REVENUE SBMA eyes P39.36-B Subic FROM RICE TARIFF CUT–DOF port expansion projects By Reine Juvierre S. Alberto @reine_alberto
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HE proposed reduction on rice tariffs would cost the national government to potentially lose around P10 billion in revenues to break-even with the farmers and consumers, according to a Department of Finance (DOF) official. Office of the Chief Economist Undersecretary Domini SD. Velasquez said in a forum on Wednesday that the government is looking to have the Tariff Commission conduct a public hearing to discuss if lowering the tariff rates would be beneficial for the
farmers, consumers and the government. “The government collects around P30 billion in revenues from the [Rice Tariffication Law] RTL. So, to bring down the prices, it would be alright to offset those losses so that everyone would benefit from the lower tariff,” Velasquez said in a mix of English and Filipino. This, after Finance Secretary Ralph G. Recto floated the idea that the government could reduce rice tariffs to as low as 17.5 percent to 20 percent from 35 percent to bring down rice prices See “DOF,” A
By Henry Empeño
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UBIC BAY FREEPORT—In a bid to make Subic the go-to port for traders and exportimport businesses in Central and Northern Luzon, the Subic Bay Metropolitan Authority (SBMA) is planning to undertake port expansion projects worth a total of P39.36 billion. These include five major development projects designed to expand existing facilities at the Boton Wharf, New Container Terminal 3, and piers at the San Bernardo, Redondo, and Lower Mau areas. Subic has a total of 12 piers and wharves that are variously used as terminals for grain, fertilizer, oil and fuel, general containerized cargo, as well as for passengers. SBMA Chairman and Administrator Eduardo Jose L. Aliño presented Subic’s port expansion plans at the Central Luzon Transport & Trade Conference 2024 held at the Hilton Clark Sun
Valley Resort on May 24, and said that his administration is bullish on the shipping industry. “This is why we are pushing for these expansion plans. We want the world to know that Subic Bay Freeport is more than capable of handling their cargo,” he said. Aliño said that under the Japan International Cooperation Agency (JICA)-Regional Development Master Plan, the SBMA plans to construct additional berthing facilities in the Boton area and expand the Boton Wharf at the approximate cost of P6.33 million. The Boton project would include reclamation for a 10-hectare terminal, expansion and deepening of the existing wharf by 1.5 meters, and the inclusion of a general cargo and roll-on roll-off (RoRo) terminal, Aliño said. The second planned development will be at the New Container Terminal 3 for additional Continued on A
PESO EXCHANGE RATES US 57.9590 Q JAPAN 0.3689 Q UK 73.9905 Q HK 7.4202 Q SINGAPORE 42.9867 Q AUSTRALIA 38.5369 Q SAUDI ARABIA 15.4541 Q EU 62.9377 Q KOREA 0.0426 Q CHINA 8.0008 Source: BSP (May 29, 2024)