ECCP at Work

Moody’s Analytics lowers 2022 PHL growth outlook

Moody’s analytics trimmed its Philippine growth forecast for this year, citing the impact of slower global demand and faster inflation on the economy. In a note titled “APAC Outlook: Economy Hits Rough Water,” Moody’s Analytics said Philippine gross domestic product (GDP) is likely to expand by 6.1% this year. This is lower than the 6.4% forecast it gave in March and well below the 7-9% government target. The think tank also retained its 5.4% growth forecast for the Philippines in 2023.

Gov’t bond yields continue to rise

The Bureau of the Treasury (BTr) on Tuesday raised only a little over half of the amount it wanted to borrow through reissued 10-year bonds amid rising bid rates. The BTr capped the annual average rate at 6.313 percent for the debt papers maturing in nine years and eight months’ time, such that it awarded P17.6 billion out of the P35-billion offering.

BSP may raise key rate in June, says Diokno

The Monetary Board (MB) may consider raising its key policy rate in June if the Philippine economy grew by 6 percent to 7 percent in the first quarter, according to MB chair and Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno. In an interview with Bloomberg, Diokno said it might take the MB at least two more meetings before the BSP’s overnight borrowing rate— which has been at a record low of 2 percent since November 2020—will finally rise.

Duterte signs electric vehicle measure into law

President Rodrigo R. Duterte has signed into law a measure regulating and developing the Philippines’ electric vehicle (EV) industry, including quotas for their adoption by various industries, the Palace said in a statement. Republic Act No. 11697 was signed on April 15 and outlines the regulatory framework for the manufacturing and adoption of electric vehicles. Its main policy aim is to promote the industry as a “feasible mode of transportation to reduce dependence on fossil fuels.”

Stock market tumbles below 7,000 on profit taking

The stock market has fallen below the 7,000 mark anew as investors immediately cashed in on Monday’s gains. The Philippine Stock Exchange index dropped yesterday to 6,980.02, 0.58 percent or 40.81 points lower than the previous day. The broader All Shares index also declined by 0.28 percent or 10.41 points to settle at 3,712.39. AB Capital Securities said the market was pulled down by profit taking following Monday’s unexpected surge at the close.

Social protection for OFWs inaccessible, inequitable – NEDA

The Philippines needs to improve its social protection system for migrant workers as this remains inaccessible and inequitable for many Filipinos. In a webinar organized by the European Chamber of Commerce of the Philippines yesterday, the National Economic and Development Authority (NEDA) said that social protection for overseas Filipino workers (OFWs) are in place, but this still needs to be strengthened. NEDA-Social Development officer-in-charge Edgardo Aranjuez said it is important to protect the rights, promote the welfare and expand opportunities for OFWs given their significant economic contribution.

BSP to explore use of digital currency

The Bangko Sentral ng Pilipinas (BSP) is looking at a long-term and “more advanced” use of central bank digital currency (CBDC) as it pushed ahead with a pilot project involving an experiment on the use of this virtual asset to transfer large-value financial transactions on a round-the-clock basis. At the seasonal spring meetings of the International Monetary Bank and World Bank, recently held in Washington DC, BSP Governor Benjamin Diokno touted this pilot run as part of efforts to bolster and ensure stability of payment systems in the Philippines. Dubbed Project CBDCPh, the pilot project will run across a limited number of financial institutions but possibly covering both banks and nonbank institutions. Through this initiative, an intersectoral project management team in the BSP will look at policy and regulatory considerations, technological infrastructure, governance and organizational requirements, legal matters, payment and settlement models, reconciliation procedures and risk management.

Fiscal deficit hits ₱187.7B in March

The national government’s budget deficit narrowed to ₱187.7 billion in March with revenue collection growing faster than public spending, Bureau of the Treasury data released Wednesday show. The latest figure represents a 1.97% year-on-year decline. However, it is higher than the ₱105.8 billion deficit recorded in February, when the gap narrowed by 8.7%. The deficit stood at ₱316.8 billion by the end of the first quarter, 1.44% lower than the same period a year ago. The Treasury reported ₱293.9 billion in collected revenues last month, rising by 35.96% as the Bureau of Internal Revenue's collection recovered from its contraction in February. The BIR collected ₱170.4 billion this March, up 27.76% from the same month last year.

WB expects high global prices until 2024

The World Bank has warned that the spillover impact on global commodity prices of Russia’s invasion of Ukraine may linger for a couple of years more. According to the Washington-based multilateral lender’s April 2022 Commodity Markets Outlook report released Tuesday night, “the war in Ukraine has dealt a major shock to commodity markets, altering global patterns of trade, production and consumption in ways that will keep prices at historically high levels through the end of 2024.” “The increase in energy prices over the past two years has been the largest since the 1973 oil crisis. Price increases for food commodities—of which Russia and Ukraine are large producers—and fertilizers, which rely on natural gas as a production input, have been the largest since 2008,” the World Bank noted in a statement. The agency projected global energy prices to increase by over half this year, although these would ease next year and in 2024.

Hot money outflows narrowed in Q1, says BSP   

Short-term investments chalked up a net outflow of $16 million in the first quarter, equivalent to just about 3 percent of the $467- million net outflow recorded in the same period of 2021.But in March alone, there was a net outflow of foreign portfolio investments worth $305 million, a reversal from net inflows of $274 million in February but smaller than the $541 million net outflows in March 2021. According to the Bangko Sentral ng Pilipinas (BSP), a $1.6-billion gross outflow of BSP-registered foreign portfolio investments in March prevailed over a $1.3-billion gross inflow. This can be attributed in part to the escalation of the war between Russia and Ukraine, spooking investors who rushed to less risky investment destinations abroad. Gross outflows in March—of which 80 percent went to the United States—were more than double or 136 percent compared to the $670 million that flowed out in February. At the same time, gross inflows were 35 percent higher compared to the $945 million registered investments that came in a month earlier.

EIU: Russia-Ukraine war to derail climate change response

The continuing global tension is expected to make the transition to clean energy more expensive and may likely derail an important move toward addressing worsening climate change. In a briefing late Wednesday, UK-based The Economist Intelligence Unit (EIU) said the implications of the Russia-Ukraine war to the world’s fight against climate change are leaning to the negative in the short term. EIU industry operations director Ana Nicholls said that challenges to clean energy transition are on the rise amid rising costs of commodities, such as energy prices.Unfortunately, net importing countries such as the Philippines are bearing the brunt of continued escalation of the war. About 50 percent of the country’s energy needs are still being imported, such as coal and oil, making the Philippines among the most vulnerable to price shocks.