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ADB trims 2023 Philippine GDP growth outlook to 5.7%; inflation steady at 6.2%

ADB cuts PHL growth outlook to 5.7%

THE ASIAN Development Bank (ADB) cut its gross domestic product (GDP) growth forecast for the Philippines this year, as elevated inflation dampens consumer spending.

In its latest Development Outlook report, the ADB trimmed its GDP growth outlook to 5.7% this year from the 6% projection it gave in April.

If realized, this would be below the government’s 6-7% target for this year, and slower than the 7.6% GDP expansion in 2022.

“We have downgraded our (Philippine growth) forecast for this year mainly due to the weakening in domestic demand,” ADB Senior Regional Cooperation Officer for Southeast Asia Dulce Zara said in a webinar discussing the report on Wednesday.

She noted last year’s economic performance reflected the reopening of the economy, strong pent-up demand and election-related spending.

“Spending, investments were also high (last year). This year, they have gone down. Another factor is the decline in exports. That’s the reason for the downgrade,” she said.

The Philippine economy expanded by 4.3% in April to June, the slowest growth in over two years, amid weak household consumption and a contraction in government spending.

The ADB’s 2023 growth forecast for the Philippines is still the second fastest among Southeast Asian economies, after Vietnam (5.8%) and ahead of Cambodia (5.3%), Indonesia (5%) and Malaysia (4.5%).

This is also higher than the 4.6% GDP growth projection for Southeast Asia, which was slightly lower than the previous forecast of 4.7%.

“The Philippines’ growth story remains strong despite an expected moderation in 2023. Public investment and private spending fueled by low unemployment rate, sustained increase in remittances from Filipinos overseas, and buoyant services including tourism will support growth,” ADB Philippines Country Director Pavit Ramachandran said in a statement.

For 2024, the ADB expects the Philippines to now be the fastest-growing economy in Southeast Asia with a 6.2% GDP growth projection. This after the ADB downgraded its growth forecast for Vietnam to 6% from 6.8% previously.

“Private consumption and investment will continue to underpin growth. A moderation in inflationary pressures next year bodes well for domestic demand,” the multilateral lender said.

Public expenditure and infrastructure spending are expected to pick up in 2024.

“Moving forward, prospects remain positive for the Philippines. We are looking at investments from the government given its pipeline of infrastructure projects and as well as continued consumer spending, which is the main driver of growth for the Philippines,” Ms. Zara said.

The ADB cited several risks to the Philippine growth outlook such as the expected slowdown in major economies, rising geopolitical tensions, and elevated global commodity prices.

“An intensified and prolonged El Niño, other severe weather disturbances, and a continuation of the Russian invasion of Ukraine could elevate inflationary pressures,” it added.

ELEVATED INFLATION
At the same time, ADB maintained its inflation outlook at 6.2% this year and 4% next year, which are both at the higher end of the Bangko Sentral ng Pilipinas’ (BSP) 2-4% annual target range.

Both forecasts are above the BSP’s average inflation projections of 5.6% for this year, and 3.3% for 2024.

At 6.2%, Philippine inflation is projected to be the third-fastest in Southeast Asia this year, following Laos (28%) and Myanmar (14%).

In 2024, the Philippines is still expected to see the third-fastest inflation, after Cambodia and Vietnam.

“Inflation is expected to soften, though the onset of El Niño and elevated global commodity prices may slow the pace of deceleration,” the ADB said.

The multilateral institution said the El Niño weather phenomenon will likely hurt the upcoming harvest, particularly in Southeast Asia.

“This could dent food security and raise inflation in net rice-importing countries, such as Bangladesh, Bhutan, Maldives, Nepal, and the Philippines,” it said.

Ms. Zara said that agriculture production in countries like the Philippines, Indonesia, Myanmar and Thailand will likely be the most impacted by El Niño-induced dry spells and droughts.

“Although inflation has moderated in the first seven months of the year, food inflation remains elevated, above 5% for Laos, the Philippines, Singapore and Malaysia. Reduced agri output both domestic and globally will be harmful for these economies,” she added.

Meanwhile, second-round effects stemming from higher transport fares and wage adjustments may also impact Philippine inflation this year.

“The government is considering extending the period for the reduced tariffs for some food items including rice which are due to expire by December 2023, to keep inflation contained,” the ADB said.

As core inflation eases, the ADB noted the BSP would likely keep policy rates steady before considering cutting them in 2024.

The BSP hiked the key policy rate by 425 basis points (bps) to 6.25% from May 2022 to March 2023.

The Monetary Board will likely hold interest rates steady for a fourth straight meeting on Thursday, as expected by 14 of 17 analysts in a BusinessWorld poll last week.

SLOWER GROWTH
Meanwhile, economic growth in developing Asia this year will be slightly lower than previously expected as the weakness in China’s property sector and El Niño-related risks cloud regional prospects, the ADB said.

Updating its regional economic outlook, the ADB trimmed its 2023 growth forecast for developing Asia to 4.7% from 4.8% projected in July.

But the growth forecast for next year for the grouping, which consists of 46 economies in the Asia-Pacific and excludes Japan, Australia and New Zealand, was revised slightly upwards to 4.8% from 4.7% previously.

“We see resilient growth in the region really based on pretty strong domestic consumption and investment, and despite reduced external demand, which is a dampener on export-driven growth,” Mr. Park said.

The ADB tempered its growth forecasts for East Asia, South Asia, and Southeast Asia this year, with China and India expected to grow 4.9% and 6.3%, respectively, slightly lower than the July growth projections of 5% and 6.4%.

China’s property crisis “poses a downside risk and could hold back regional growth,” the ADB said in its report.

The Manila-based lender maintained its 2024 growth forecasts for China and India at 4.5% and 6.7% respectively.

While growth has so far been robust and inflation pressures are receding in developing Asia, Mr. Park said governments need to be vigilant against the many challenges the region faces, including food security.

Inflation in developing Asia is forecast to ease to 3.6% this year from 4.4% last year, and continue to slow to 3.5% in 2024, giving central banks policy space, but the ADB said interest rate hiking and easing cycles will vary going forward. — Luisa Maria Jacinta C. Jocson with Reuters

#ADB #cuts #PHL #growth #outlook

Peso weakens as ADB cuts PHL growth forecast

THE PESO depreciated against the dollar on Wednesday after the Asian Development Bank (ADB) cut its economic growth forecast for the Philippines this year.

The local currency closed at P56.81 versus the dollar on Wednesday, weakening by 5.50 centavos from Tuesday’s P56.755 finish, data from the Bankers Association of the Philippines’ website showed.

The local unit opened Wednesday’s session at P56.70 per dollar, which was also its intraday best. Its weakest showing was at P56.824 against the greenback.

Dollars traded went down to $835.5 million on Wednesday from $1.17 billion on Tuesday.

The peso declined on Wednesday as the ADB slashed its growth forecast for the country, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

In its latest Asian Development Outlook report, the ADB trimmed its Philippine gross domestic product (GDP) growth forecast for this year to 5.7% from the 6% estimate it gave in April.

This is below the government’s 6-7% growth target.

The peso also depreciated due to a stronger dollar and global crude oil prices recently, Mr. Ricafort said.

“The peso depreciated due to some market caution ahead of the Federal Reserve policy decision overnight,” a trader added in an e-mail.

The Fed was set to announce its latest policy decision overnight after a two-day meeting.

The US central bank raised borrowing costs by 25 basis points (bps) in July, bringing its target rate to a range between 5.25% and 5.5%.

It has hiked rates by a cumulative 525 bps since it began its tightening cycle in March last year.

For Thursday, the trader said the peso could weaken further as the market will stay on the sidelines ahead of the Bangko Sentral ng Pilipinas’ own policy decision.

Both the trader and Mr. Ricafort see the peso ranging from P56.70 to P56.90 per dollar on Thursday. — AMCS

#Peso #weakens #ADB #cuts #PHL #growth #forecast

PHL urged to expand presence in global bond market

By Luisa Maria Jacinta C. Jocson, Reporter

THE Philippines should further diversify its borrowing sources and expand its presence in the global bond market, analysts said.

“Given the country’s credit rating and its commitment to pursue its infrastructure program. Definitely, the government can still expand its borrowings,” Jonathan L. Ravelas, senior adviser at professional services firm Reyes Tacandong & Co., said in a text message.

Last week, National Treasurer Rosalia V. de Leon said that the government is looking to issue Islamic bonds or Sukuk bonds by yearend or 2024. This would mark its first issuance in the Islamic bond market.

“The Philippine government’s plan to debut in the Islamic bond market with a Sukuk issuance is a strategic move that could diversify its investor base and potentially offer more favorable terms. Coupled with its $5-billion program for commercial bonds, the government is evidently keen on robust external financing,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.

This year, the government’s borrowing plan is set at $2.207 trillion, consisting of P1.654 trillion from domestic sources and P553.5 billion from foreign sources.

The government is planning $5 billion (around P283 billion) in global bonds this year.

In January, the Philippines already raised $3 billion from its first US dollar bond issuance for the year.

Mr. Roces said it could be beneficial to expand borrowing options beyond commercial and Sukuk bonds.

“Markets like Euro bonds and Samurai bonds offer low-interest rates, while green bonds could attract investors focused on sustainability,” he said.

The government, under President Rodrigo R. Duterte, had raised €2.1 billion (P122.4 billion) from a triple-tranche offering of euro-denominated bonds in April 2021. In April 2022, it raised 70.1 billion Japanese yen from a four-tranche Samurai bond offer.

Mr. Roces said the sustainability of this borrowing strategy “will be a function of the country’s overall debt level and fiscal health, which remain manageable.”

The government had ramped up borrowings at the height of the coronavirus pandemic. As of end-June, the National Government’s outstanding debt as a share of gross domestic product stood at 61%, lower than 62.1% from the same period a year ago.

However, it is still slightly above the 60% threshold considered by multilateral lenders to be manageable for developing economies.

“Diversifying borrowing sources should help mitigate risks and provide balance in the financial portfolio. Also, given the global dominance of the US dollar, the US market offers significant liquidity. However, it does come with currency risks given the current environment,” Mr. Roces said.

The government is still targeting a US-denominated retail Treasury bond offering by the end of the month.

“I think the plan to borrow retail dollar bonds is a good way to tap our overseas Filipino workers (OFWs) who may lack access to good investment outlets for their hard-earned money,” a trader said in a text message.

“It is always good for the government to have different borrowing sources. However, I think the BTr will still have to source more borrowing locally given the domestic liquidity,” the trader added.

The government’s borrowing mix favors domestic sources (75%) in order to mitigate foreign currency risk.

Nicholas Antonio T. Mapa, senior economist at ING Bank N.V. Manila, said domestic borrowings are still the safer option.

“Borrowing in foreign debt is generally carried out to take advantage of lower borrowing costs abroad or to deepen the market for Philippine debt. Despite the ability to borrow in foreign currency, the bulk of the borrowing remains domestic in nature in order to safeguard against too much currency and interest rate risk,” he said in a Viber message.

“Currently, the Philippines is awash with cash and perhaps borrowing in local currency will still not result in a substantial tightening of financial markets,” he added.

Mr. Mapa also said that the country’s investment grade status could also help offset high interest rates.

“Rates, however, are relatively high and there remain uncertainties regarding exchange rates and policy direction. Despite this, given our investment grades status, the Philippines may still be able to secure debt at relatively affordable rates,” he added.

The Philippines’ credit rating is currently above the minimum investment grade across three major debt watchers, with S&P Global Ratings at “BBB+,” Fitch Ratings at “BBB,” and Moody’s Investors Service rating the country at “Baa2.”

#PHL #urged #expand #presence #global #bond #market

Bamboo pushed as alternative building technology in PHL

By Miguel Hanz L. Antivola

BAMBOO is expected to be included in the latest edition of the National Structural Code of the Philippines (NSCP) as an alternative building technology.

Base Bahay Foundation, Inc. has piloted local research and the use of bamboo in socialized housing due to its sustainability, resiliency to natural disasters and cost efficiency.

“The sooner we get the release of the NSCP with bamboo as part of its eight edition, the sooner we can entice all engineers and architects to start thinking of bamboo as a construction mainstream,” Pablo A. Jorillo, Jr., general manager at Base, told reporters at the Bamboost architecture and design forum in Makati City on Sept. 15.

Mr. Jorillo said this would be the first “tipping point” to push bamboo towards mass adoption in construction and regulation.

Johann Baar, director for affordable housing and technology at Hilti Foundation, said the Base Innovation Center is working on the building code for bamboo.

This is aligned with the Philippine National Standard 22157 that informs testing procedures for obtained bamboo culms, and the International Organization for Standardization 22156 that aims to institutionalize the use of bamboo in structural design.

However, Mr. Baar noted that bamboo still carries the stigma of being “the poor man’s material” which is not durable and can quickly deteriorate.

He noted bamboo research has shown that a few species have a capacity for construction.

“It’s not just social housing. It’s a strong and resilient material for any kind of building construction. We are on our way to making it a standard building material like timber,” Mr. Baar said.

Mr. Baar mentioned that some Latin American countries have used bamboo technology to build structures up to three levels that have stood up to 400 years, alongside applications in resorts and domes.

“We are seeing its potential in medium- and high-rise structures,” Mr. Baar said. “When you look at timber structures, it took us a decade or more to see it in high-rise structures. It’s just a question of a couple of years hopefully.”

SOCIALIZED HOUSING
Given bamboo’s abundance in the global south, Base first saw the opportunity to use the alternative material to address the Philippines’ housing problem.

Citing its advantages, Mr. Jorillo said that bamboo lowers the cost of housing by 30-40% compared to units built with standard concrete hollow blocks.

Base’s cement bamboo frame technology, which uses load-bearing bamboo with metal connections and mortar cement plaster, is designed to withstand typhoons of 240-280 kilometers per hour and resist earthquakes of 6.5-7.5 magnitude, he said.

Base has built over 1,500 homes nationwide, with about a third in Negros Occidental. This is part of its Impact 2025 project, where it aims to build 10,000 sustainable housing units.

Other areas serviced by Base include Batangas, Sorsogon, Tacloban, Dumaguete, Davao, Cotabato, and Bukidnon.

Mr. Jorillo said that Base is working with the Department of Human Settlements and Urban Development, local government units, nongovernment organizations, as well as the private sector such as Ayala Land, Inc. and Megaworld Corp., for more opportunities in bamboo construction and housing technology.

Base has also built about 400 houses in Nepal, with plans to expand in Sri Lanka and India next, he noted.

#Bamboo #pushed #alternative #building #technology #PHL

AI could unlock growth opportunities for PHL

By Luisa Maria Jacinta C. Jocson, Reporter

THE PHILIPPINES should take advantage of the shift to artificial intelligence (AI) technologies, which is expected to generate growth opportunities for many industries, analysts said.

Moody’s Investors Service said in a Sept. 6 report that AI and other transformative technologies have the potential to “reshape entire industries” and “drive the emergence of new sectors, possibly in content generation, mobility, education, or healthcare fields.”

New technologies, it said, will boost growth by increasing productivity through task automation, process optimization, and enhanced decision making.

However, Moody’s also noted that AI may displace industries and workers and may increase inequalities due to the potential demand for high-skilled workers.

The Philippines ranked 54^th out of 181 countries in a 2022 Government AI Readiness Index by Oxford Insights.

Ria Ysabelle Flora, Aboitiz Data Innovation Head of Power Solutions, said increased AI adoption would benefit a number of industries and sectors, such as finance, in the Philippines.

“With the help of tech and AI, banks that used to work on decades-old systems now are slowly realizing the importance of overcoming their technical debt,” she said in a Viber message.

Ms. Flora said engineering-centric industries such as energy and manufacturing are also seen to gain through business process optimization brought by AI.

“I see a lot of value potential in AI coming into the energy sector,” she added.

AI is also expected to bring more opportunities for growth in the Information Technology and Business Process Management (IT-BPM) industry.

IT and Business Process Association of the Philippines (IBPAP) President Jack Madrid said that generative AI (GenAI) holds exciting potential for customer service.

Full-scale implementation of GenAI could boost productivity by 50% or even more, he said, citing studies.

“In contrast to traditional AI, which relies on rule-based systems or standard machine learning algorithms, GenAI goes further by understanding context, creating coherent and contextually appropriate responses, and handling customer inquiries more effectively,” he said in an e-mail.

“It can decode complex customer questions, discerning nuanced intent, sentiment, and context, leading to accurate and relevant responses. By leveraging customer data, GenAI provides personalized answers and suggestions, enhancing the customer experience with tailored solutions,” he added.

Mr. Madrid said that GenAI can make the workforce more productive by automating repetitive tasks and allow them to focus on more judgment-sensitive activities.

“GenAI will create demand for people adept at leveraging AI technologies to drive innovation and growth. As the demand for AI applications and customization grows, the need for skilled AI prompt engineers becomes more crucial,” he added.

Mr. Madrid said that it will be crucial for the IT-BPM sector to harness GenAI. “By embracing this cutting-edge technology, we not only propel our IT-BPM industry to new heights of efficiency and innovation but also fortify the nation’s position as a beacon of progress in the digital age.”

OTHER SECTORS
AI is seen to boost Philippine growth by 12% in 2030, equivalent to $92 billion, according to a report by EDBI and Kearney.

Economist Intelligence Unit analyst Laveena Iyer said the launch of ChatGPT in November 2022 spurred an intense debate about how AI will affect and benefit businesses and consumers.

“Many companies are already using forms of AI or machine learning for various purposes, from automation of manual processes to predicting and fulfilling customer demand,” Ms. Iyer said in an e-mail.

She said the benefits of leveraging AI would depend on the pace of adoption, a country’s digital infrastructure and regulatory framework.

The consumer goods sector, particularly e-commerce, would also gain from AI technologies, she added.

Ms. Iyer noted that retail companies are using AI for predictive analysis and use geolocation data to refine transparency in their supply chains.

“In the Philippines, online retail sales grew sharply owing to the pandemic, and we expect it to account for more than 9% of total retail sales market by 2027 (from less than 3% of the overall market in the pre-pandemic period). We could expect some of the major market players to adopt AI as they go ahead, if they haven’t already,” she added.

Senti AI Founder and Chief Executive Officer Ralph Vincent J. Regalado said that it is “inevitable” that technologies will change the ways people work, regardless of the industry.

“AI is meant to help people and businesses become more efficient and that should translate to better productivity, better output, and of course, increased returns that will reflect on a macroeconomic scale,” he said in a Viber message.

While the Philippines isn’t at the forefront of tech adoption, Mr. Regalado said the government’s push for digital transformation and the private sector’s interest in AI solutions is a “good sign.”

Industries that are customer facing, he said, could also benefit from AI solutions, like conversational AI or data analytics.

“The way I see it, those that would benefit the most from emerging technologies are not sectors, but specific organizations that have identified a use case where they can apply these technologies,” he added.

Adopting AI technologies will ultimately lead to adjustment in business operations and the overall economy, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

This would require “fine-tuning some functions to adapt to AI, a technology that could be further harnessed to further boost efficiency and overall productivity of businesses, education, and other institutions such as government functions,” Mr. Ricafort said.

RISKS
According to Aboitiz Data Innovation’s Ms. Flora, the biggest risk is believing that AI can “solve anything.”

“Technology for technology’s sake is very dangerous because it retrofits solutions to problems that may be deeply entangled with other exogenous factors,” she said.

Ms. Flora said that many firms are eager to utilize ChatGPT and other similar technologies to deploy as chatbots, hoping these would increase sales.

“However, marketers and executives often forget that these models and technologies would only be effective if the rest of their sales pipeline is efficient and ready to accommodate the possible surge of sales leads,” she added.

For his part, IBPAP’s Mr. Madrid said the disruption from GenAI should not be underestimated.

“There is a consensus that it may lead to substantial workforce reductions in certain industries and job roles, necessitating large-scale reskilling initiatives to address changing talent needs,” he said.

Mr. Madrid said that studies suggest that graphic designers, journalists, photographers, social media influencers, authors, educators, and linguists may experience significant changes due to AI.

There is also the risk of displacing low-skilled workers and jobs.

“There could be job displacements, especially if it’s a low-level and repetitive kind of job that can be automated. But again, workers at risk of displacement should be upskilled to take on new jobs created due to AI adoption,” Senti AI’s Mr. Regalado said.

Workers and businesses would need to adjust to these changes.

“Some jobs may be considered obsolete if it can be done by AI, but those displaced workers should be trained to do new jobs created by the changing business landscape,” he added.

Mr. Madrid said that upskilling the workforce will be key to adapting to new roles and meeting evolving demands.

“In this new era, GenAI will not merely automate tasks but also assist in equipping the workforce with new skills,” he added.

Mr. Regalado said that public and private sectors should ensure that the right policies and regulations are in place to be ready for AI adoption.

“Do we have enough regulations in place to make sure our data is secure, and that AI will be used for good? Do we have the infrastructure to support tech adoption? Does our workforce have the digital literacy and skill to keep up with the changing demands of the business landscape? These are the things we have to fix if we want the Philippines to reap the full benefits of AI,” he added.

Data privacy is also at risk with the increased use of AI. “AI relies heavily on data. A lot of it, and most likely, very sensitive as well. Organizations have to make sure that they have very secure data storage to avoid any breaches. Another risk is that the models used may exhibit bias if it was not trained properly, or if it was not fed the right kind of data,” Mr. Regalado said.

He noted organizations should make sure to do a risk assessment before adopting AI.

Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said that AI technology cannot fully replace the high-level analytical and custom work of professionals.

“While the disruption that may be caused by AI is concerning, particularly on the prospect of massive job loss, unless it is able to fully replicate the best attributes of employees at all levels of employment, the humans are here to stay,” he said in an e-mail.

Mr. Ridon said that AI models can provide big data confirmation of professional-created analysis at best, but it will still be limited to the breadth of information inputted to the model.

“Corporates, particularly public-facing firms, should also determine the role of AI in managing its customer service experience, as many consumers will still opt to be able to speak or chat with an actual person to immediately resolve their concerns,” he said.

AI models can also make errors, and clients may harbor negative sentiment due to the lack of accountability in the mistakes of AI models, Mr. Ridon said.

“The best attributes (of humans) are not just their capacity to churn out information to end users, it includes the ability to process and analyze complex information, the ability to take responsibility for all decisions and action, and most importantly, the ability to empathize with others,” he added.

#unlock #growth #opportunities #PHL

PHL stocks to take cue from BSP, Fed meetings

STOCK MARKET investors are expected to keep a close eye on the policy meetings of the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) this week.

The benchmark Philippine Stock Exchange index (PSEi) lost 82.06 points or 1.32% to end at 6,126.34 on Friday, while the broader all shares index slipped by 33.13 points or 0.98% to 3,320.18.

Week on week, the PSEi went down by 96.60 points or 1.55% from its close of 6,222.94 on Sept. 8.

“Hopes that both the Fed and the BSP will keep their policy rates unchanged may somehow give market sentiment a boost,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“Dovish signals are seen to lift the market while hawkish signals may pull the market down.”

The Federal Open Market Committee (FOMC) is widely expected to keep rates unchanged at the end of its two-day policy meeting on Sept. 20. The US central bank raised borrowing costs by 25 basis points (bps) in July, bringing the Fed Funds target rate at 5.25% and 5.5%.

Meanwhile, the Monetary Board (MB) is scheduled to hold a policy-setting meeting on Thursday. The MB has kept rates unchanged at a near 16-year high of 6.25% during its last three meetings.

BSP Governor Eli M. Remolona, Jr. on Thursday said a policy rate hike is unlikely despite the uptick in August inflation.

A BusinessWorld poll last week showed 14 of 17 analysts see the Monetary Board keeping benchmark rates steady, while three analysts expect a 25-bp rate hike.

“Post-monetary policy meeting price action could drive longer-term trend. We may see the market start (this week) with gains, given the removal of selling pressure from FTSE (Financial Times Stock Exchange) rebalancing-related flows,” China Bank Securities Corp. Research Associate Lance U. Soledad said in an e-mail on Friday.

Mr. Tantiangco said investors may also take their cues from the release of the BSP’s Business and Consumer Expectations Surveys on Friday.

For the rest of the week, Mr. Soledad said volatility is expected to be elevated ahead of and following the FOMC and the MB’s policy meetings.

“Should we see upbeat price action after these key events, then that could indicate that a near-term trough had been reached and could significantly improve buying appetite — warranting more active accumulation in index heavyweights,” Mr. Soledad said.

The PSEi is expected to test the 6,150 level.

“If the market is able to get back above the said line, it is seen to continue trading within 6,150-6,400. If it fails to do so, however, the market’s new trading range is seen from 6,000-6,150,” Mr. Tantiangco said.

For this week, Mr. Soledad placed PSEi’s resistance at 6,350-6,370. — S.J.Talavera

#PHL #stocks #cue #BSP #Fed #meetings

‘Ber’ months seen to double transport demand; Grab PHL to focus on safety, reliability

Grab Philippines expects a surge in transportation demand in the last few months of the year, prompting the company to prioritize safety and reliability, its chief operating officer (COO) said.

“The fundamental issue with the ‘ber’ months is that demand doubles,” Grab Philippines COO Ronald G. Roda said in an interview with BusinessWorld, reflecting on the company’s historical demand throughout the remainder of the year.

“As early as Nov. 15, the demand starts to double,” he said. “So you would need more than necessary to accommodate more people during the Christmas period.”

According to Melissa B. Carunungan, former spokesperson for the Metro Manila Development Authority, there was an increase in the number of vehicles on EDSA, with 417,000 vehicles observed daily as of Nov. 24 of the previous year, compared to 398,000 on Nov. 10 of the same year.

The pre-pandemic record was 400,000, she said.

However, Mr. Roda said that the transport industry, including buses and jeepneys, has yet to reach pre-pandemic levels at this point due to work-from-home arrangements.

“The number of people riding is not there, but we’re probably at 70-75%,” he said on nearing the usual volume of passengers.

“Our goal for the year is to get us back to what we were pre-pandemic,” he added on Grab’s reliability outlook which is less focused on growth.

The Land Transportation Franchising and Regulatory Board and the Department of Transportation released 4,500 cars in January, 10,500 in May, and another 10,500 in August for common pool use, Mr. Roda said.

“Most of these will come on the road in October to November,” he said.

Grab has begun ramping up its Airport to Anywhere fleet of vehicles to cater the spike in demand for air travel in December, alongside differentiating the service from the everyday GrabCar.

It has also started doubling down on its motorcycle taxi arm Move It as a cost-efficient alternative, alongside tech features such as GrabShare, multi-stop rides, and multi-service type allocations during peak hours.

Mr. Roda noted that GrabShare made up 20% of Grab’s rides before the pandemic.

HELPING DRIVER-PARTNERS
Grab has introduced new features for driver-partners, including Sessions and Personalized Alerts, to help reduce their idle time and optimize their earning potential on the platform, according to the company.

Both features inform them about areas of high passenger demand, enabling them to maximize their trips per online hour while covering shorter distances, Grab said.

“Our partners drive to earn and support their families,” Mr. Roda said. “We understand how every minute online is a potential income opportunity for them.”

“In 2022, Grab driver-partners from across Southeast Asia enjoyed a 3.55% reduction in average idle time, compared to that in 2021, helping to further optimize their earnings potential on the platform.”

According to Grab, it introduced the Share Live Location feature in July, allowing passengers to share their live location with their assigned drivers when they are uncertain about waiting at the pin location.

Other backend features that assist drivers with their bookings comprise back-to-back bookings, auto accept, allocation swaps, and the homegrown navigation system GrabMaps.

Grab has also enabled more pronounced time-based and location-based incentives for drivers to cater the ‘ber’ months demand, Mr. Roda said.

“Rides are 20% longer than the average GrabCar ride of 10 kilometers,” he said. “On Christmas, this 10-kilometer ride will take one hour. That’s a problem that is difficult to solve.”

“When a driver drives for ten hours and he used to do 15 rides, he will only be able to do 12 [this time].”

“Incentives are there to try to normalize driver behavior,” he said. “You need some kind of impetus to make sure they behave properly.” — Miguel Hanz L. Antivola

#Ber #months #double #transport #demand #Grab #PHL #focus #safety #reliability

AMRO trims 2023 PHL growth outlook

PHILIPPINE gross domestic product (GDP) growth is likely to fall slightly below the government’s target this year, the ASEAN+3 Macroeconomic Research Office (AMRO) said.

“The Philippines’ economic growth is projected to moderate to 5.9% in 2023 due to high base effects and weaker external demand, before edging up to 6.5% in 2024 as external demand recovers,” AMRO Group Head and Principal Economist Runchana Pongsaparn said in a statement on Tuesday.

Mr. Pongsaparn was part of the AMRO team that visited Manila from Aug. 29 to Sept. 8. for its annual consultation.

“Meanwhile, domestic demand is expected to remain robust supported by continued improvement in labor market conditions, lower inflation, robust overseas remittances, and higher government infrastructure spending,” he said.

The think tank’s latest 2023 GDP forecast is lower than the 6.2% it gave in its Regional Economic Outlook Report in July. It also falls below the government’s 6-7% GDP target.

AMRO kept its Philippine growth forecast for 2024 unchanged at 6.5% amid an expected recovery in external demand. This is at the lower end of the government’s 6.5-8% target for next year.

The think tank noted the Philippine economy continued to show strong growth momentum in the first half of 2023. Philippine GDP expanded by a weaker-than-expected 4.3% in the second quarter, bringing the first semester growth to 5.3%.

“Growth was supported by resilient domestic demand with a strong recovery in the labor market despite weaker external demand. Notwithstanding a widening current account deficit, external position remains sound with sufficient international reserve buffer and low external debt,” AMRO said.

AMRO also said Philippine full-year inflation will likely settle at 5.5% this year before slowing further to 3.8% in 2024.

“Despite some moderation, inflationary pressure will likely remain elevated as reflected in the high level of core inflation, due to a positive output gap and the second-round effects induced by increases in the minimum wages and expectations of persistently high inflation,” it added.

Meanwhile, AMRO flagged risks to the Philippines’ growth outlook such as elevated inflation, local supply shocks, an economic slowdown in major trading partners and global financial market volatility.

“The long-term growth potential is largely affected by the scarring effects of the pandemic, the pace of infrastructure development, geopolitical risks, and the economic losses from natural disasters, which are being exacerbated by climate change,” it said.

Among AMRO’s policy recommendations to boost growth include upskilling the workforce, implementation of policies to attract investments and promote exports of goods and services. The government can also improve the Philippines’ competitiveness through infrastructure investment and digitalization, it added.

For the medium and long term, AMRO said “fiscal policy should balance between restoring fiscal buffer and supporting sustainable growth and development.”

The think tank said close coordination between regulators will be crucial in identifying and mitigating financial stability risks that may arise from nonfinancial firms.

“Meanwhile, the authorities should continue to improve the liquidity management framework, develop the bond and repo markets, and continue to expand financial inclusion, to enhance the system’s resilience to shocks and promote market activities,” it added. — Luisa Maria Jacinta C. Jocson

#AMRO #trims #PHL #growth #outlook

PHL plans sukuk issue by yearend

By Luisa Maria Jacinta C. Jocson, Reporter

THE PHILIPPINE government is looking to issue Islamic bonds, also known as sukuk bonds, by yearend or in the first quarter, National Treasurer Rosalia V. de Leon said.

This would mark the Philippines’ debut in the Islamic bond market, as the government looks to fund its budget deficit.

“As for the timing, we’ve been told that there would have to be a 12-week preparatory lead time that would be needed, so hopefully we can do this before the end of the year or if ever, it would have to slip to the first quarter of 2024,” Ms. De Leon said during the Philippine Economic Briefing in Dubai on Tuesday.

She said that the government is now consulting potential underwriters for the details of the issuance, including its structure, which may be a “hybrid Wakalah, Ijara or Murabaha.”

“In terms of the tenor size, I think the sweet spot would be between the long (tenors of) five and the 10-year (bonds) because this would also be something that would be catering to our small investors and at the same time also to the institutional investors,” she said.

Ms. De Leon did give the offer size for the planned sukuk bonds. In July, Finance Secretary Benjamin E. Diokno told Bloomberg that the government was eyeing to raise $1 billion from the sukuk bond deal.

Bangko Sentral ng Pilipinas (BSP) Assistant Governor Arifa A. Ala said that the sukuk issuance is a “good complement” for the central bank’s efforts to promote Islamic banking in the country.

“Having sukuk bonds being issued by the National Government will send a strong signal that the Philippines is now ready to accept applicants (and) new players in the Islamic banking system,” she added.

Ms. De Leon also reaffirmed the government’s plan to offer US dollar-denominated retail Treasury bonds within the month.

“Even in terms of the tenor, we’re looking at the belly of the curve, so that would be a long five. The other feature is that the tax would be assumed by the government, that means the full coupon would be going to our Filipino investors. That’s something we hope to launch (by) the end of the month,” she added.

The government is planning to offer another $5 billion worth of dollar-denominated bonds this year, the national treasurer said.

“We’re looking at another billion-dollar issuance and maybe this time around, if we make it to the 12-week preparation time, then we’ll be issuing a sukuk structure bond as the remaining issuance from the Republic for the rest of the year,” she added.

MAHARLIKA FUND
Meanwhile, the economic team presented the country’s first sovereign wealth fund, the Maharlika Investment Fund (MIF), to potential investors in Dubai.

“During this visit to Dubai, we’ve been in touch with sovereign wealth funds, but even with infrastructure funds and potential co-investors, looking into joint ventures,” Ms. De Leon said.

“We’ve been able to present a list of our infrastructure flagship projects and how these would complement their own priorities.”

In July, President Ferdinand R. Marcos, Jr. signed into law the Maharlika Investment Fund Act of 2023, which creates the MIF.

The sovereign wealth fund will be managed by the Maharlika Investment Corp. (MIC), which will have authorized capital stock of P500 billion.

“It’s intended to be an additional funding source. We’ll probably graduate to upper middle-income status within two years and will no longer be entitled to concessional loans. This is in preparation for that,’ Mr. Diokno said.

The Finance chief said that the Philippines must ramp up investments in projects that will improve physical and digital connectivity, as well as boost the country’s transition to clean energy.

#PHL #plans #sukuk #issue #yearend

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