Philippines Annual Inflation Accelerates In September

Oct 5, 2007 - Philippines annual inflation accelerated to 2.7% in September from 2.4% in August, the National Statistics Office said Friday. Consumer prices rose more than the expected growth of 2.6%. However, inflation remained with in the central bank's expectations of 2.1% to 2.8%.

Core inflation, excluding food and energy items, eased to 2.7% in September from 2.9% recorded in the prior month.

On a monthly basis, consumer prices climbed 0.1% in September, the same rate registered in August. Inflation averaged 2.6% for the first nine months of the year.

Higher prices of food, beverages and tobacco and prices of services item contributed to annual increase in the inflation rate in September. Food, beverages and tobacco charges climbed at a faster pace of 3.5% and service charges were up 2.4%. Meanwhile, inflation for clothing eased to 2.0% and fuel, light and water prices slowed to 2.3%.

Compared to previous month, food, beverages and tobacco charges moved up 0.7%, while price increments in clothing decelerated to 0.1%. Prices of fuel, light and water fell 2.3% and housing and repair charges showed a zero growth rate.

The inflation numbers came a day after the central bank lowered the key overnight borrowing rate or Reverse Repo Rate, by 25 basis points to 5.75%. The overnight lending or repurchase rate, RP was also reduced by a similar margin to 7.75%. This was the second time that the policy rates were adjusted this year, after the central bank slashed the RRP rate by 150 basis points in July, while removing the tiering system.

Philippine Central Bank Unexpectedly Cuts Key Rate

Oct 4, 2007 - The Philippine central bank unexpectedly cut its benchmark interest rate for the second time this year to stoke an economy growing at its fastest pace in two decades.

Bangko Sentral ng Pilipinas lowered its overnight borrowing rate by a quarter percentage point to 5.75 percent. Only three of 12 economists in a Bloomberg News survey expected a cut, while the others predicted no change. The benchmark is at its lowest level since 1992.

"Economic growth is rising, money supply growth has been slowing down, inflation is clearly under control," Jonathan Ravelas, an economist at BDO Unibank in Manila, said after today's announcement. "The rate cut clearly highlights that the central bank is very comfortable." Ravelas had expected the rate to be kept unchanged.

The central bank said inflation, close to a seven-year low, is unlikely to accelerate as gains in the peso hold down the cost of imports, including oil. The outlook for consumer price increases is 'benign' while the currency provides a 'buffer,' Bangko Sentral Governor Amando Tetangco said today.

The government forecasts the $117 billion Philippine economy will expand by as much as 6.7 percent this year, after growing at the fastest pace in two decades in the second quarter. Bangko Sentral unexpectedly reduced its benchmark to 6 percent in July.

Peso Gains

The peso has climbed 9 percent against the dollar this year, the second-biggest gain among actively traded currencies tracked by Bloomberg in Asia, and is poised for its biggest annual gain against the U.S. currency since 1994. The peso rose 0.4 percent to 44.96 per dollar today, according to Tullett Prebon Plc.

Inflation in 2007 will fall below Bangko Sentral's 4 percent to 5 percent target, the bank said today. The consumer price index rose to 2.6 percent from a year earlier in September after increasing 2.4 percent in August, according to the median estimate of 13 economists surveyed by Bloomberg News. The National Statistics Office report is scheduled for release at 9 a.m. tomorrow in Manila.

"We continue to believe that inflation is likely to accelerate, potentially restricting the central bank's ability to loosen policy significantly," Frederic Neumann, a Hong Kong- based economist wrote in a note to investors after today's cut. Neumann, who predicted today's reduction, said any further lowering would depend on monetary policy in the U.S.

Central bank Governor Amando Tetangco on Sept. 19 said there was 'room to maneuver' interest rates after the U.S. Federal Reserve lowered borrowing costs a day earlier.

Bangko Sentral will also lower the rate it pays for funds in its special deposit accounts, with payments for amounts held for six-months dropping to 6.25 percent from 6.5 percent, an official said after today's announcement.

The central bank in May extended access to the higher- interest deposit accounts to slow money-supply growth, which eased to the slowest pace in 11 months in August after surging by a record in April.

Philippines Trade Deficit Widens In July As Imports Outpace Exports

Sep 25, 2007 - Philippines trade deficit widened to US$854.0 million in July from US$396.0 million a year ago, the National Statistics Office said Tuesday. In June, the trade deficit stood at US$589.0 million.

The report said that imports climbed 14.3% from the previous year to US$5.042 billion, a sharp jump compared to the 3.8% growth in the prior month. Meanwhile, exports rose 4.3% to US$4.188 billion in July, after climbing 1.5% in the prior month. This has taken the total merchandise trade to US$9.230 billion, marking an increase of 9.5% from the previous year; the highest growth recorded this year.

On a monthly basis, total imports rose at a slower pace of 7.2% in July, compared to the 9.5% growth in June.

Imports of electronic products, accounting for 42.7% of the aggregate import bill, advanced 12.8% on an annual basis to US$2.152 billion, compared to an increase of 8.5% in June. The annual increase was due to the robust inbound shipment of semiconductors. On a monthly basis, imports of electronic products dropped 1.7% in July, spiking 22.5% in June.

Commodity wise, cereals and cereal preparations led the list with 59.6% growth, followed by mineral fuels, lubricants and related materials climbing 44.3%. Imports of organic and inorganic chemicals, telecommunication equipment and electrical machinery, plastic and electronic products also registered double-digit growth in July.

The statistics office further said that the total external trade in goods for January to July reached US$59.080 billion, showing a 5.1% increase from last year. Total imports grew 4.1% to US$30.355 billion, while exports went up 6.3% to US$28.725 billion. This has resulted in a trade deficit of US$1.629 billion during the seven-month period.

The U.S remained the top source of imports, claiming12.5% of total import bill. This was despite the imports from US falling 9.9% annually. Meanwhile, exports to the U.S amounted to US$767.95 million. Imports from Japan declined 2.6% while imports from Saudi Arabia increased 319.6% from last year.

Philippines records net portfolio investment outflow in Aug on subprime concerns

Sep 13, 2007 - The Philippines recorded a net outflow of 246.4 million US dollars in foreign portfolio investments in August, reflecting investor concerns about a fallout from the US housing and credit problems, the central bank said Thursday.

It was the first monthly net outflow recorded this year and a turnaround from a net inflow of 1.1 billion dollars in July.

"Concerns over the extent and impact on the global credit market of the US subprime mortgage problem led foreign investors to stay on the sidelines," the central bank said in a statement.

"Strong domestic economic data as well as strong corporate earnings results for the first semester, however, tempered the size of the net outflow," it said.

On a gross basis, registered foreign portfolio investments in August totaled 1.39 billion dollars. Of this, 85 percent were invested in the stock market and 15 percent in peso-denominated government securities, the central bank said.

Capital repatriated outside the country amounted to 1.64 billion dollars.

For the first eight months of the year, however, a net inflow of 3.36 billion dollars was recorded, 3.3 times bigger than the previous year's level, central bank data showed.

"The nervousness in the market sparked by the US mortgage crisis led to some outflow during August but overall, the country's economic fundamentals appeared to have broadly kept investors' interest in the Philippines for the first eight months of 2007," the central bank said.

"Moreover, the central bank's announcement that local banks have no exposure to subprime assets also helped ease investors' concerns."

Philippine net foreign direct investments drop 59.2 percent in June

Sep 10, 2007 - Net foreign direct investments (FDI) in the Philippines dropped 59.2 percent to 89 million US dollars in June from the year-earlier period, central bank data released Monday showed.

For the first half of the year, however, net FDIs posted a 16-percent increase to 1.2 billion dollars. That was despite the repayment by local subsidiaries of loans to their parent companies abroad, the central bank said in a statement.

The figure reflects increased equity capital inflows, which came mostly from the US, Japan, Singapore and South Korea, it said.

Central bank governor Amando Tetangco Jr said the business climate in the Philippines remains conducive to investors.

"The macroeconomic gains realized in the first semester, such as the strong external payments position, decelerating inflation, and the robust second-quarter GDP growth are expected to provide more confidence-boosting support to the country's investment landscape," he said.

Philippine August Intl. Reserves Hits All-Time High

Sep 7, 2007 - The Philippine central bank said Friday that the gross international reserves or GIR increased US$2.3 billion month-on-month to reach an all-time high of US$30.3 billion at the end of August. The increase in reserves was mainly due to sustained foreign exchange inflows, which also helped the Central Bank to service its debt and those of the National Government. Receipts of income from investments abroad also contributed to the increase in the GIR level.

The current GIR level can cover imports of goods and payments of services and income for 5.6 months in terms of adequacy of reserves, the central bank noted. Further, the central bank said this level was equivalent to 5.9 times of the country's short-term external debt based on original maturity and 3.2 times based on residual maturity.

The Bank added that Net international reserves-NIR, including revaluation of reserve assets and reserve-related liabilities, also stood at US$30.3 billion from the previous month in August. NIR is the difference between the BSP's GIR and total short-term liabilities.

Philippine August inflation slows; targets met

Sep 5, 2007 - Philippine consumer prices rose at a slower pace of 2.4 per cent in August from 2.6 per cent the previous month, with the government on track to meet its inflation targets, officials said Wednesday.

The lower inflation rate was due to the slower annual price hikes of all the commodity groups, except for clothing, the National Statistics Office said.

Central bank governor Amando Tetangco said with the benign figure in August, the Philippines was on track to meet its target of containing inflation to between 4 and 5 per cent for the whole year.

Government, however, would remain vigilant on 'risks to guide our conduct of monetary policy going forward'.

'Our neutral monetary policy is bolstered by moderating risks from liquidity growth and adverse weather conditions,' he said.

The NSO said Inflation for food alone slid to 2.5 per cent from 2.8 per cent in July. Inflation for fuel, light and water group slowed to 5.1 per cent from 5.3 per cent.

The low inflation figure was announced just days after government boasted the economy had expanded 7.5 per cent year-on-year in the second quarter, the fastest growth clip in two decades.

President Gloria Arroyo on Tuesday said sub-prime woes that has wreaked havoc in world markets would likely not affect Philippine growth.

Philippines M3 Domestic Liquidity Rises In July

Aug 31, 2007 - Philippines M3 or domestic liquidity grew 18.7% year-on-year in July after expanding 19.4% in June, the Bangko Sentral ng Pilipinas said Friday.

On a monthly basis, the seasonally adjusted M3 grew at a slower pace of 0.7% in July after increasing 1.2% in June. In May, M3 rose 20.5 percent. The central bank data showed that the domestic liquidity slowed for the third straight month in July as an impact of monetary measures taken by the bank in May.

The central bank said that the moderate growth in the domestic liquidity in July is due to a fall in net domestic assets due to steady rise in net foreign assets. The year-on-year growth of net domestic assets dropped to 0.4% in July from 3.8% in June, while the growth of net foreign assets increased to 39.6% from 31.1% during the same period.

In July, credit extended to the public sector expanded at a slightly faster pace to 10.7% from 10.5% in June. At the same time, credit to the private sector grew to 7.2% from 6.0%.

Philippines Q2 GDP up 7.5 pct yr-on-yr,fastest in 20 years

Aug 30, 2007 - The Philippine economy expanded by 7.5 percent in the second quarter from a year earlier, the fastest growth in two decades, President Gloria Arroyo said Thursday.

The growth exceeded consensus estimate of 6.9 percent, based on a poll by Thomson IFR.

"We are confident of achieving our full-year growth target of 6.1-6.7 percent," Arroyo told reporters in a briefing.

The second quarter growth beat forecasts by both government economic managers and the private sector.

Growth for the period was fuelled largely by the services sector which went up 8.4 percent on an annualised basis.

Industrial output grew 8.0 percent from the previous year.

Agriculture output, which makes up a fifth of the country's gross domestic product grew 3.9 percent despite a dry spell.

Given the robust second quarter growth, Economic Planning Secretary Augusto Santos said there is a good chance of exceeding the 2007 full-year growth forecast.

"Hitting 7.0 percent is not impossible. We don't expect any slowdown in the second half, we may even exceed the target." (1 US dollar = 46.63 pesos)