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BUSINESS HEADLINES THIS PAST WEEK...
(Mini Reads followed by Full Reports below)

DID CHINA JUST START A CURRENCY WAR?


AUGUST 23 - -Beijing’s depreciation of the yuan in mid-August has triggered a wave of copycat moves from other countries and falling values of currencies. Is this a new currency clash, or is each case specific? What happened in China? In three consecutive days last week, the People’s Bank of China devalued the national currency, with a 4.4 percent overall depreciation. The step was intended to revive exports, but caused a domino effect leading to panic and fluctuations in equity markets around the globe.Read if you have more tme: World markets bearish on grim China data As a result, several countries followed China’s lead and devalued national currencies to keep pace with Beijing and support their exports; others are victims of falling commodity prices, while smaller countries are affected by their bigger neighbors. Kazakh tenge The worst case is the Kazakh tenge that saw a 23 percent loss on Thursday after President Nursultan Nazarbayev decided to allow a freely floating exchange rate. The government of Central Asia’s biggest crude exporter is trying to manage the falling crude prices, and the economic weakness of its top trading partners - China and Russia. Vietnamese dong Hanoi devalued the dong for the third time this year by 1 percent on Wednesday to 21,890 dong a dollar, which is another mark that the Asian exchange rates are now under extreme pressure. “The dong will have enough room to fluctuate more flexibly to cope with negative impacts from international and domestic markets, not only from now until the rest of the year but also in the early months of 2016,” said a statement from the central bank. Malaysian ringgit The currency dropped to a 17-year low on Thursday and foreign exchange reserves sank below the $100 billion point for the first time in five years. READ MORE...PLUS RELATED....

ALSO: China's Economy Growing At 'Reasonable' Pace, No Basis For Further Currency Devaluation - Premier Li


AUGUST 30 -Li Keqiang, premier of the People's Republic of China and party secretary of the State Council, speaks at a news conference in Oct. 2014. In remarks published August 30, 2015, Saturday, Li sought to clam fears about China's economic slowdown and stock market volatility. Getty Images 
China's economy is growing at a “reasonable” pace, Chinese Premier Li Keqiang said Friday, adding that there was no basis for a continued depreciation of the Yuan, after the country's central bank allowed the currency to devalue 2.8 percent this month. China's official news agency Xinhua quoted Li as saying "the Chinese economy is operating within an appropriate range and China continues to lead the world in terms of growth". Li's remarks, made at a high-level meeting of officials on Friday, but published late Saturday, stressed that measures taken by the country's Communist Party government to stabilize the stock market were proving effective. China's stock market has endured a period of extreme volatility in recent months, resulting in trillions of dollars being wiped off the value of shares. On Friday, Shanghai's benchmark index was nearly 38 percent below where it was on June 12, Reuters reported. READ MORE...

ALSO: Address slowing growth, gov't told


AUGUST 28 -The administration’s economic managers should focus on strengthening the agriculture and manufacturing sectors to arrest the current slowdown
Research group IBON said that government should be concerned about the country’s slowing growth and the slowdown in agriculture and manufacturing. Although the Philippine Statistics Authority reported that the gross domestic product (GDP) grew in the second quarter, IBON stressed that comparing the first semester data marks a slowdown in growth. Compared to a 6.2% growth in the first semester in 2014, the GDP growth rate in the first semester in 2015 is only 5.3 percent. This is also only a slight pick-up from the 5.0% growth rate compared to the first quarter in 2015. The group noted that the last two semesters are the slowest under the Aquino administration since 2012. Agriculture contracted by 0.3% in first semester of 2015 from 1.9% in the same period in 2014. Manufacturing also slowed down from 9% to 5.3% in the first semester this year. READ MORE...

ALSO: Losses from Metro traffic jam to reach P6 billion per day by 2030


AUGUST 25 -IF not immediately and fully addressed, economic losses due to heavy traffic in Metro Manila could balloon to P6 billion a day from the current P2.4 billion by 2030, a senator has warned. Sen. Bam Aquino has filed a resolution seeking to review the existing Roadmap for Transport Infrastructure Development to formulate effective strategies and solutions to address the negative impact of the worsening traffic conditions in Metro Manila on the economy. “Commuters as well as private vehicle owner suffer the monstrous and extremely costly traffic every day in Metro Manila,” the senator emphasized in Senate Resolution No. 1532, citing a study by the Japan International Cooperation Agency (JICA) The study entitled, “Roadmap for Transport Infrastructure Development for Metro Manila and Surrounding Areas,” was conducted in coordination with the Department of Transportation and Communications (DOTC), Department of Public Works and Highways (DPWH), Metropolitan Manila Development Authority (MMDA), and other relevant agencies.
The roadmap was approved last Sept. 2, 2014 by the National Economic Development Authority (NEDA) board. READ MORE...

ALSO: Economy slows down to 5.6% in Q2


AUGUST 27 -Skyline of the Makati City business district, a sprawling commercial area in Metro Manila. Philstar.com/File
 The Philippine economy grew by 5.6 percent for the second quarter of this year, the Philippine Statistics Authority said on Thursday. The expansion slowed down from 6.7-percent growth rate in the same period last year. National Economic Development Authority Director General Arsenio Balisacan said the current gross domestic product (GDP) is slightly below the government's target but assured that the growth momentum will be sustained. "As one of the countries with a respectable growth compared to other emerging Asian economies, the Philippines remains an attractive market and investment destination. Our economic fundamentals are still strong," Balisacan said. The second quarter GDP, however, is an improvement from the previous quarter's 5 percent. "The Philippine Statistics Authority’s report also indicates sustained strong performance of the private sector. Importantly, the second quarter GDP growth shows the expanse of the country’s resiliency from the prevailing weakness of the global economy," Balisacan said. READ MORE...

ALSO TIMES COLUMN: Still a remittance economy
[The billions of pesos worth of liquidity injected into the economy from the foreign-currency earnings of our OFWs is still one of the main pillars of economic growth, not its good governance campaign and certainly not its poor fiscal policies as evidenced by its perennial underspending. Indeed, the so-called trickledown effect this and other administrations before it like to brag about from past economic growth surges has never happened.]



AUGUST 24 -by ERNESTO F. HERRERA LATEST reports from the Bangko Sentral ng Pilipinas (BSP) said a total of $12.08 billion in remittances were sent by overseas Filipino workers from January to June this year, higher than remittances of only $11.45 billion in the first half of 2014. “Remittances remained robust, partly due to stable demand for skilled Filipinos abroad,” the BSP said. Whether this administration cares to admit it or not, the billions of pesos worth of liquidity injected into the economy from the foreign-currency earnings of our OFWs is still one of the main pillars of economic growth, not its good governance campaign and certainly not its poor fiscal policies as evidenced by its perennial underspending. Indeed, the so-called trickledown effect this and other administrations before it like to brag about from past economic growth surges has never happened. Despite the Philippine economy’s supposed rapid growth under the Aquino administration, many observers have noted the government’s failure to promote inclusive growth.Economic growth in this administration has not translated into employment opportunities and poverty reduction.OFW remittances still provide the growth that matters most in the lives of Filipinos. They go straight to households, to relatives, families and friends that use them to better their lives, to finance food, shelter, education and entrepreneurial pursuits. The Philippines depends on remittances perhaps more than any country in the world. We are the third highest remittance-recipient country after India and Mexico, and the highest when remittances are measured as ratios to population, GDP and exports, according to Ernesto Pernia of the UP School of Economics.Money transfers from Filipinos working all over the world account for at least 10-percent of our country’s GDP, the second largest source of foreign capital after value-added exports like electronic components, and a major source of private consumption which in turn accounts for 75-percent of GDP. READ MORE...


READ FULL MEDIA REPORTS HERE:

Did China just start currency war?

MANILA, AUGUST 31, 2015 (REUTERS) Published time: 23 Aug, 2015 -Beijing’s depreciation of the yuan in mid-August has triggered a wave of copycat moves from other countries and falling values of currencies.

Is this a new currency clash, or is each case specific? What happened in China?

In three consecutive days last week, the People’s Bank of China devalued the national currency, with a 4.4 percent overall depreciation.

The step was intended to revive exports, but caused a domino effect leading to panic and fluctuations in equity markets around the globe.

READ MORE: World markets bearish on grim China data

As a result, several countries followed China’s lead and devalued national currencies to keep pace with Beijing and support their exports; others are victims of falling commodity prices, while smaller countries are affected by their bigger neighbors.

Kazakh tenge

The worst case is the Kazakh tenge that saw a 23 percent loss on Thursday after President Nursultan Nazarbayev decided to allow a freely floating exchange rate. The government of Central Asia’s biggest crude exporter is trying to manage the falling crude prices, and the economic weakness of its top trading partners - China and Russia.

Vietnamese dong

Hanoi devalued the dong for the third time this year by 1 percent on Wednesday to 21,890 dong a dollar, which is another mark that the Asian exchange rates are now under extreme pressure.

“The dong will have enough room to fluctuate more flexibly to cope with negative impacts from international and domestic markets, not only from now until the rest of the year but also in the early months of 2016,” said a statement from the central bank.

Malaysian ringgit

The currency dropped to a 17-year low on Thursday and foreign exchange reserves sank below the $100 billion point for the first time in five years.

READ MORE...

Turkish lira

The Turkish currency is one of the world’s worst-performers since the Chinese devaluation. The Turkish lira has lost more than five percent against the dollar after Beijing’s move, almost nine percent in a month and more than 25 percent in a year.

Turkey's ruling Justice and Development Party (AKP) won elections on June 7 but for the first time since 2002, lost the parliamentary majority, and will not be able to form a government alone. Leading parties in Turkey have not yet been able to agree on forming a coalition, which weakens the lira.

Saudi Arabia’s riyal

Saudi Arabia has already spent $65 billion from its reserves since the oil price decline began, down from a maximum $737 billion in August 2014. However, the remaining $672 billion is still enough to keep the riyal stable. At the same time, according to Bloomberg, the forward contracts used by traders to bet on or hedge against future price moves – are at the lowest level since 2003, which implies about a one percent fall in the national currency over the next year.

Who else?

Among the other potential victims of the current market situation are Kyrgyzstan’s som, Tajikistan’s somoni and Turkmenistan’s manat.

All of these Asian former-Soviet countries have close economic relations with Russia, China and Kazakhstan which makes it highly probable they will be damaged as well.

Another country from the Russia-led Eurasian Economic Union, Armenia is also hit by the ruble’s depreciation. Armenia’s dram has lost 15 percent in the past 12 months and it’s not the end.

Belarus, one Russia’s closest allies, has also seen its national currency plummet. The Belarusian ruble lost some 27 percent in a year and it may still not have reached rock bottom.

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RELATED

STOCKS TAKE A BLOODBATH By ALBERT CASTRO on August 25, 2015

Like murderers out for the kill, investors in the Philippine Exchange yesterday went on a massive selling spree leaving the composite index down by 6.65 percent.

It was the second biggest daily drop after the 9 percent slide that happened during the political turmoil in 1991 that saw the overthrow by “people power” of President Joseph Estrada even as his impeachment trial was well on the way.

The biggest daily slide-15 percent-occurred in 1986 during the time of coup d’etats against President Corazon Aquino.

The sell-off is obviously in reaction to more than 8 percent fall in China’s index and the general rout in the Asian markets.

The peso lost 31 centavos to close at P46.815 in the Philippine Dealing Exchange. The market has been in a foul mood since the US Federal Reserve Board started debating on a possible increase in key rates.

The situation worsened after China devalued the yuan, leaving currencies in Asian markets slowly coming down in value against the American dollar.

Some Asean countries have been using the yuan, also officially known as the renminbi among the world’s central banks.

Trading turnover totaled P12.74 billion.

“I would argue what’s happened in the Philippines today is very much consistent in pressures felt by all emerging markets not only in equities but all classes of assets,” said Hans Sicat, Philippine Stock Exchange (PSE) president, in a press conference held after the close of trading.

The market, according to Sicat, is at present valued at P13.27 trillion, down from its weekend value of P14.04 trillion, or a P764 billion drop, about 5.48 percent.

READ MORE...

“Nothing much has changed from a general fundamental standpoint, if one looks at how relatively strong the fundamentals are compared with peers in the region. We hope that the recovery expected this week will be a strong one. The economy will continue to grow and the increased spending will continue to be a strong driver for the economy,” Sicat noted in what appears to be an effort to soothe frayed nerves.

The drop is the 10th highest on record in the PSE.

This however has stoked memories of the same event as funds sell-off their holdings in “panic,” as described by Luis Limlingan, managing director at Regina Capital Development Corp.

“This hasn’t happened since Lehman,” said Limlingan, referring to the investment bank’s bankruptcy that fueled the 2008 rout.

Astro del Castillo, managing director at First Grade Finance, Inc., said China’s recent developments – currency devaluation coupled with a weak manufacturing data on Friday – led to the bloodbath.

“There’s something wrong in the Chinese economy causing uncertainty, which reverberated in the market. Now it has spurred competitive devaluation. So it affects the different sectors of the economy,” he said.

“There was a scare since we didn’t have trading last Friday. So it accelerated the outflow,” said Alexander Adrian Tiu, senior equity analyst at AB Capital Securities, Inc.

Tiu said the drop has pulled the market’s valuation to 19x its present price-to-earnings (PE) ratio but is still nowhere near what can be called cheap.

“When we had a paper-tantrum before, we went 17x PE. I am seeing that downside right now. So maybe the support will be we could go as low as 6,200 to 6,300,” he added.

Most actively traded Ayala Land, Inc. was down P3.35 to P33.75. GT Capital Holdings, Inc. was down P128 to P1,136. Universal Robina Corp. was down P12.50 to P180. Ayala Corp. was down P50.50 to P704.50. Philippine Long Distance Telephone Co. was down P214 to P2,536. BDO Unibank, Inc. was down P3.95 to P95. SM Investments Corp. was down P57 to P840. SM Prime Holdings, Inc. was down P57 to P840. Globe Telecom, Inc. was down P174 to P2,450.

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RELATED FROM THE INQUIRER

PESO SLIPS TO LOWEST LEVEL IN 5 YEARS: PH stocks fall in global rout By: Doris Dumlao-Abadilla, Paolo Montecillo @inquirerdotnet Philippine Daily Inquirer 01:13 AM August 25th, 2015


BLOODBATH ON STOCK MARKET Red dominated the electronic board on the trading floor of the Philippine Stock Exchange in Makati City as the stock market plunged 6.40 percent by midday Monday, pulled down by concerns on the Chinese economy and the slump in commodity prices. The local stock market is now down 17 percent from its peak earlier this year. AFP

The Philippine stock market wiped out P764.44 billion of its market value following a record free-fall while the peso slipped to a five-year low against the US dollar on Monday.

The massive declines came amid a global financial market meltdown triggered by concerns on the Chinese economy and the slump in commodity prices.
The paper loss on the stock market was equivalent to around 6 percent of the country’s nominal gross domestic product, the total value of goods produced and services rendered, in 2014.

The Philippine Stock Exchange index (PSEi) fell 487.97 points—the largest decline in a single day in absolute terms—to close at 6,791.01. This reversed the PSEi’s remaining gains, resulting in a year-to-date loss of 6 percent.

The amount of market value lost during Monday’s stock market rout was more than the entire market capitalization of some of the country’s most valuable companies, like tycoon Henry Sy’s SM Investments Corp. (P720 billion) which owns the largest property, banking and retailing businesses in this side of the world or telecommunications giant Philippine Long Distance Telephone Co. (P594 billion).

At the same time, the peso depreciated to its lowest point since President Aquino came to power at 46.815 to $1, losing 31.5 centavos from last week’s close of 46.50 to $1.

But local monetary authorities said intervention in the foreign exchange market would be kept to a minimum to allow the currency to move in line with the region.

READ MORE...

Yuan devaluation

In a press briefing, PSE president Hans Sicat said this heightened volatility started with the surprise devaluation of the Chinese yuan two weeks ago alongside the slump in commodity prices, particularly base commodities and oil.

Because local financial markets were closed on Friday, a nonworking holiday in observance of Ninoy Aquino Day, Sicat said pent-up pressures added to Monday’s sell-off.

“What’s happening in the Philippines is consistent with pressures across emerging markets,” he said.

In terms of percentage decline, the local stock market had seen worst single-day drops in previous years. The PSEi saw a similar pace of decline–442.57 points, or 6.75 percent–on June 13, 2013, during the first episode of the “taper tantrum” when the US Federal Reserve first hinted at the tapering of its aggressive monetary stimulus.

On Oct. 27, 2008, or at the height of the US-epicentered global financial crisis, the PSEi lost 12.27 percent in a single day.

Disconnect

But Sicat said there was “a little bit of disconnect” between the market decline and the strong Philippine macroeconomic fundamentals, which he noted had greatly improved since the global financial crisis.

In recent years, the Philippines has achieved a higher growth trajectory in a low inflation rate environment with its total foreign exchange reserves exceeding foreign debt while its government had achieved investment grade rating for the first time.

Bear territory

The stock market has now pulled back by around 17 percent from the all-time high closing of 8,127.48 seen in earlier months but, according to Sicat, it is too early to say whether the local stock market would fall into bear territory.

When a stock market falls by 20 percent from its peak, some investors deem this as technically entering the bear market.

Sicat acknowledged that the sharp decline would be a negative factor as far as capital market activities were concerned. “Issuers may be hesitant to pull the trigger,” he said.

But while domestic economic fundamentals have changed a lot for the better since 2008, economies today are more intertwined and multiple asset classes in various geographies easily get infected, Sicat noted.

“We’re a small economy in the overall scheme of things whereas China is the largest. So, clearly it has a global effect,” he said.

Loss of confidence

The local stock barometer is deemed an advance gauge of the domestic economy. A sustained period of falling stock prices indicates a loss of overall confidence. When investor sentiment is weak, investors in turn spend less for job- and income-creating expansion activities.

Michaelangelo Oyson, president of BPI Securities, said looking back at the situation during the US Fed taper tantrum in 2013, the market’s next support level would be at around 6,400.

Cheering weak peso

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said the central bank would “carefully provide liquidity in the market should the exchange rate volatilities become excessive” but saw no need for any aggressive intervention.

The BSP maintains a flexible policy for the peso, but reserves the right to intervene occasionally to keep spikes in check.

Tetangco said excessive volatility in the peso’s value could be disruptive to business planning, in the short term, and may also “disanchor” inflation expectations.

“So far, the peso volatility has remained within the middle of the range of the volatilities of regional currencies and inflation expectations are still well-anchored,” Tetangco said.

Beneficial to OFWs

The peso’s recent weakness is seen beneficial to some sectors of the economy, particularly overseas Filipino worker (OFW) households and exporters who earn foreign exchange as this will greatly boost the peso equivalent of their foreign exchange earnings.

Foreign exchange movements raise issues for small economies like the Philippines, which on one hand earn money from overseas through remittances and exports, and buy vital commodities like food and fuel from other countries.

Imported goods and foreign debt payments become more expensive when the peso declines. However, exporters and families receiving remittances from overseas workers earn more money in peso terms for every dollar they receive.

Local economists said given its current position, the Philippine economy has much to gain as its currency weakens.

“My estimate is that about 75 percent of the economy will benefit from a weaker peso,” University of Asia and the Pacific economist Victor Abola said in an interview.
On Monday, peso reached a low of 46.845: $1 and a high of 46.65: $1 after opening at 46.70: $1 on Monday. Volume was thin at $572.50 million from last Thursday’s $699.70 million in trades.

BPO workers

Abola said about 15 million people rely on remittances from OFWs. Dollar-earning business process outsourcing (BPO) companies directly employ about one million people, while at least four times as many people work in industries that thrive due to outsourcing.

“The depreciation of the currency is positive, as long as it’s not too sharp that it becomes disruptive,” Abola said. The peso has declined by about 2 percent since July—relatively stable against other currencies in the region.

Local firms that compete with multinationals would be able to better compete.

“When the peso becomes more competitive, it also boosts the performance of local, non-exporting companies because it eases competition from imported alternatives,” Bank of the Philippine Islands economist Emilio Neri Jr. said on Monday.

As the cost of imported goods goes up, local products become more affordable to Filipino consumers. “The stronger the peso, the more we flood the local market with imported products that would have otherwise generated profit and jobs to a lot of Filipinos,” he said.

Low inflation also gives policymakers the space to allow the peso to depreciate. In July, consumer prices rose by an average of 0.8 percent relative to year-ago levels, the slowest pace on record. This lowers the risk of breaching inflation targets set by the government, even if the cost of imported goods climbs.

The weaker peso would also help improve government revenue collections, offsetting the higher cost of paying for dollar-denominated state debt.

“Remember that customs receipts and (sales taxes) improve when the peso is weak. If the economy’s growth accelerated, Bureau of Internal Revenue’s [collections] also improve,” Neri said.

He also credited the government’s fiscal authorities for veering away from borrowing heavily from overseas in the past five years—a decision that insulates the economy from the negative effects of a weaker currency.

“I don’t think the Aquino administration would have been able to successfully fund [projects] if the national government had not changed its borrowing tack,” Neri said.

Risk aversion

Siddharth Mathur, an economist at Citigroup, said risk aversion was spreading, now via the equity markets.

“Falling commodity prices have been sending an alarming message about global final demand for several months already, and have now perhaps fallen far enough to trigger a shift in the market’s sanguine growth outlook.

The inability of Chinese policymakers to engineer a bounce in growth, together with large currency devaluations across the world and uncertainty around the Fed’s policy normalization path have all contributed to the market’s nervousness ahead of this week’s meeting of global policymakers at Jackson Hole,” Mathur said.

If this sell-off damages the consensus view that the US Fed will start raising interest rates this year, Mathur said the US dollar could underperform in this environment, with the euro and Japanese yen likely to be the main beneficiaries.

“Emerging markets were already suffering from growth underperformance, and so are unlikely to be able to withstand this turn in global risk appetite.

Even though positioning in Asian FX (foreign exchange) markets is modest by historical standards—and in some instances is already at extreme short—we expect the currency markets will continue to bear the brunt of this sell-off,” Mathur said.

Policy intervention, which in Asia has traditionally been the main volatility absorber, may be less reliable this time, the economist said. With inflation low, commodity prices falling and output gaps widening, he said Asian policymakers would be under no pressure to lean against currency depreciation at this time.

“But as the global sell-off is still young, it is possible that investors look to any similar puts in other markets as offering an opportunity to further reduce their exposure. We believe it is still too early to expect bargain-hunting,” he said.


CBC, CANADA

China's Economy Growing At 'Reasonable' Pace, No Basis For Further Currency Devaluation: Premier Li By Mark Hanrahan @markdhanrahan m.hanrahan@ibtimes.com on August 30 2015 2:54 AM EDT


Li Keqiang, premier of the People's Republic of China and party secretary of the State Council, speaks at a news conference in Oct. 2014. In remarks published August 30, 2015, Saturday, Li sought to clam fears about China's economic slowdown and stock market volatility. Getty Images

China's economy is growing at a “reasonable” pace, Chinese Premier Li Keqiang said Friday, adding that there was no basis for a continued depreciation of the Yuan, after the country's central bank allowed the currency to devalue 2.8 percent this month.

China's official news agency Xinhua quoted Li as saying "the Chinese economy is operating within an appropriate range and China continues to lead the world in terms of growth".

Li's remarks, made at a high-level meeting of officials on Friday, but published late Saturday, stressed that measures taken by the country's Communist Party government to stabilize the stock market were proving effective.

China's stock market has endured a period of extreme volatility in recent months, resulting in trillions of dollars being wiped off the value of shares. On Friday, Shanghai's benchmark index was nearly 38 percent below where it was on June 12, Reuters reported.

READ MORE...

The yuan can remain “basically” stable on a “reasonable and equilibrium level,” said Li, according to a statement posted on a Chinese government website. He added that China will continue to carry out proactive fiscal policy and prudent monetary policy and will use “more precise” measures to cope with downward pressure on the economy.

After years of double-digit economic growth, China's economy has slowed recently. Chinese government figures said that the country had met its growth target of 7 percent for 2014, but many economists and commentators have expressed skepticism about the veracity of these claims.

Chinese policy makers want to stabilize shares before a Sept. 3 military parade celebrating the 70th anniversary of the World War II victory over Japan, two people familiar with the matter, who asked not to be identified because the intervention wasn’t publicly announced, told Bloomberg.

World markets closed Friday having largely recovered from China-induced panic selling, but observers remain concerned the turmoil in the world's number two economy will drag down global growth.


iBON FOUNDATION

Address slowing growth, government told 2015 August 28|

The administration’s economic managers should focus on strengthening the agriculture and manufacturing sectors to arrest the current slowdown

Research group IBON said that government should be concerned about the country’s slowing growth and the slowdown in agriculture and manufacturing.

Although the Philippine Statistics Authority reported that the gross domestic product (GDP) grew in the second quarter, IBON stressed that comparing the first semester data marks a slowdown in growth. Compared to a 6.2% growth in the first semester in 2014, the GDP growth rate in the first semester in 2015 is only 5.3 percent. This is also only a slight pick-up from the 5.0% growth rate compared to the first quarter in 2015.

The group noted that the last two semesters are the slowest under the Aquino administration since 2012.

Agriculture contracted by 0.3% in first semester of 2015 from 1.9% in the same period in 2014. Manufacturing also slowed down from 9% to 5.3% in the first semester this year.

READ MORE...

According to IBON, this shows that the Philippine economy in fact started to slow in 2014 and is headed for further slowdown because government continues to rely on shallow and unsustainable external sources. The slowdown in exports from 14.6% to 1.2% this quarter has dragged down the GDP. Likewise, compensation of overseas Filipinos notably declined.

This only highlights the flaw of government’s over reliance on unsustainable sources of growth and the urgency of reversing the policies of economic liberalization.

Instead of giving hype on increasing public spending, the administration’s economic managers should focus on strengthening the agriculture and manufacturing sectors to arrest the current slowdown in economic growth, the research group said. (end)


MANILA TIMES

‘Losses from traffic jam to reach P6B a day by 2030’ August 25, 2015 10:51 pm by VOLTAIRE PALAÑA, REPORTER

IF not immediately and fully addressed, economic losses due to heavy traffic in Metro Manila could balloon to P6 billion a day from the current P2.4 billion by 2030, a senator has warned.

Sen. Bam Aquino has filed a resolution seeking to review the existing Roadmap for Transport Infrastructure Development to formulate effective strategies and solutions to address the negative impact of the worsening traffic conditions in Metro Manila on the economy.

“Commuters as well as private vehicle owner suffer the monstrous and extremely costly traffic every day in Metro Manila,” the senator emphasized in Senate Resolution No. 1532, citing a study by the Japan International Cooperation Agency (JICA)


BAM AQUINO

The study entitled, “Roadmap for Transport Infrastructure Development for Metro Manila and Surrounding Areas,” was conducted in coordination with the Department of Transportation and Communications (DOTC), Department of Public Works and Highways (DPWH), Metropolitan Manila Development Authority (MMDA), and other relevant agencies.

The roadmap was approved last Sept. 2, 2014 by the National Economic Development Authority (NEDA) board.

READ MORE...

Citing the study’s preliminary analysis, Bam Aquino said the lower-income households will be the hardest hit when congestion worsens by 2030 as they will spend no less than 20 percent of their monthly household income on transport.

“Without intervention, the traffic demand will likely increase by 13 percent in 2030, and the transport cost will be 2.5-percent higher,” the Senator said.

According to the senator, relevant government agencies and local government units must contribute by drafting effective planning strategies and traffic management systems in order to improve traffic conditions in Metro Manila.

“The MMDA cannot solve the worsening traffic condition alone. The DPWH, Land Transportation Office (LTO) and Land Transportation Franchising and Regulating Board (LTFRB), and the private sector must also do their share in solving the dilemma,” Bam Aquino said.

Among the factors that contributed to the worsening traffic condition is the significant population increase in Metro Manila which now stands at 16.5 million. (Population of the entire Philippines is now 101.6 M)

“Maaantala ang ating kaunlaran kung ang araw-araw na biyahe ay ikalulugi ng ating mga mamamayan at ng buong bansa [Our prosperity will be delayed if our people and the country as a whole will incur losses from their daily commute],” said Senator Aquino.


PHILSTAR

Economy slows down to 5.6% in Q2 By Patricia Lourdes Viray (philstar.com) | Updated August 27, 2015 - 10:04am 1 26 googleplus0 2


Skyline of the Makati City business district, a sprawling commercial area in Metro Manila. Philstar.com/File

MANILA, Philippines (UPDATED 12:05 p.m.) - The Philippine economy grew by 5.6 percent for the second quarter of this year, the Philippine Statistics Authority said on Thursday.

The expansion slowed down from 6.7-percent growth rate in the same period last year.

National Economic Development Authority Director General Arsenio Balisacan said the current gross domestic product (GDP) is slightly below the government's target but assured that the growth momentum will be sustained.

"As one of the countries with a respectable growth compared to other emerging Asian economies, the Philippines remains an attractive market and investment destination. Our economic fundamentals are still strong," Balisacan said.

The second quarter GDP, however, is an improvement from the previous quarter's 5 percent.

"The Philippine Statistics Authority’s report also indicates sustained strong performance of the private sector. Importantly, the second quarter GDP growth shows the expanse of the country’s resiliency from the prevailing weakness of the global economy," Balisacan said.

READ MORE...

Government final consumption expenditure grew to 3.9 percent from 1.7 percent in the previous quarter.

Public construction also improved from a 24-percent contraction last quarter to a 20-percent growth, Balisacan said.

"This is a result of government’s efforts to address issues on spending bottlenecks, especially for public infrastructure, which held back growth in the first quarter," the NEDA official said.

Meanwhile, the private sector maintained its strength as capital formation grew from 17.4 percent as opposed to the 8.6 growth in the same period last year.

Exports grew from 5.9 percent in the same period last year to 31.3 percent in the second quarter this year.

Balisacan noted that this improvement dispels doubts in service-oriented industries such as the business process outsourcing sector.

Imports also grew to 12.7 percent this quarter from the 4.9 percent growth in the same period last year.

"It is likewise notable that imports of services gained a double-digit growth of 26.3 percent from 9.8 percent in the second quarter of 2014," Balisacan added.

The NEDA official concluded that the second quarter GDP shows that the country is still on the "right track" in achieving its development goals outlined in the Philippine Development Plan 2011-2016.

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RELATED FROM THE TRIBUNE

Economists: 5.6% growth in 2nd qtr disappoints Written by Tribune Wires Friday, 28 August 2015 00:00

President Aquino’s economic managers call it an improvement but economists said the 5.6 percent growth in the second quarter remains a disappointment on the heels of the adjusted lackluster five percent growth in the first quarter.

The ever-changing economic numbers raised the prospect that the growth figure for the second quarter may also be actually lower.

The Philippine Statistics Authority (PSA) said in a statement that the first quarter gross domestic product (GDP) growth figure was revised downward from 5.2 percent to five percent due to downward revisions in public administration and defense; mining and quarrying, and agriculture, hunting, forestry and fishing.

Gross National Income (GNI), which includes foreign remittances, was also reduced to 4.2 percent from 4.7 percent during the period.


DIOKNO

University of the Philippines School of Economics (UPSE) professor Benjamin Diokno said with the downward adjustment of the first quarter growth rate, the first semester figure is a disappointing 5.3 percent.

“This is a major let-down from the government’s official forecast of seven to eight percent GDP growth rate for 2015. Hence, I agree with the decision of government authorities to downgrade their forecast to six to 6.5 percent growth rate,” Diokno said.

Diokno added even the adjusted growth target is a tall order. “The economy has to grow from 6.7 percent to 7.7 percent to meet the lower adjusted GDP forecast,” he said. The target range is unlikely since the country will face an even more challenging economic environment. “Agriculture will continue to contract since El Nino is likely to be harsher and longer. With the Chinese economy slowing, the outlook for the global economy is turning out to be hazier. And with the continuing slide in world oil prices, all oil-producing nations, bar none, will face economic slowdown and fiscal distress,” he said.

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He added forecasters are putting much faith on the ability of the Aquino administration to move and complete projects much faster. “But that remains to be seen. As of May 2015, the government has spent only 26.8 percent of the P432 billion for infrastructure and other capital outlays,” he said.

“Even then it can’t be a major source of growth, being only about four percent of projected GDP. Note, also, that the administration cannot disburse more than what Congress has authorized it to spend,” Diokno said.

Palace officials, however, dwelled on the second quarter figures being higher than the “adjusted” numbers in the first three months saying growth quickened.

Palace spokesman Edwin Lacierda credited the growth to “prudent fiscal management” and policies pursued by President Aquino, “which has helped transform the country into one of the fastest-growing economies in the region.”

Boosted by higher government spending, the April to June gross domestic product (GDP) grew 5.6 percent, outpacing the 5.0-percent growth in the previous quarter, which was the lowest in three years, Economic Planning Secretary Arsenio Balisacan added.

Standard Chartered Asia economist Jeff Ng said with the government now saying it sees a six to 6.5 percent growth for this year, it implies GDP expansion will hit 6.7 percent to 7.7 percent.

Outlook dims Businesses are not buying government projections of a stronger growth in the final half of the year, based on a Bangko Sentral ng Pilipinas (BSP) survey released yesterday.

The business outlook on the economy turned less optimistic for the third quarter with the overall confidence index (CI) in the survey declining to 41.4 percent compared to 49.2 percent in the second quarter survey.

The survey results showed the number of optimists declined but continued to be greater than the number of pessimists during the quarter. The confidence index is computed as the percentage of firms that answered in the affirmative less the percentage of firms that answered in the negative.

Respondents who were mostly business executives said optimism is falling as a result of the expected slack in demand during the rainy season, lower crop production as a result of the El Niño, closed fishing season in Davao Gulf from July to September, and lower consumer spending in view of increased expenditures on education.

“The sentiment of businesses in the Philippines mirrored the less buoyant business outlook in the US, but was in contrast to the more bullish views of those in the UK, Germany, Korea, Singapore, Hong Kong, and India,” according to the BSP survey.

Across different types of businesses, the sentiment was also less positive. In particular, exporters posted the biggest drop in the confidence index both for the current and next quarters (hitting a record-low in six years).

Importers and domestic-oriented firms’ outlook for the third quarter was also less upbeat but turned more bullish for the next quarter.


BALISACAN

“Our economic fundamentals are still strong. We have to make sure we are mindful of the challenges we are facing,” Socioeconomic Planning Secretary Arsenio Balisacan said.

“The quality and the rate of growth of the Philippine economy gives some assurance that with greater vigilance... we can withstand the volatile markets overseas,” he added.

Finance Secretary Cesar Purisima said in a statement that “robust domestic demand”, along with the remittances from 10 million Filipinos working abroad and the booming business process outsourcing industry, were all lifting growth. With the second quarter numbers in, Barclays said it cut its 2015 growth forecast for the Philippines to 5.5 percent, but said Balisacan’s expectation of 6.0 to 6.5 percent growth was “realistic”.

“Overall, despite the cut in our growth forecast, we expect the Philippines to continue to outperform the other Asean economies, with the country set to be the fastest growing economy among the major Asean economies for a third consecutive year in 2015,” Barclays regional economist Rahul Bajoria said in an e-mail.

But he warned that government spending still had not risen fast enough and exports had been weak, weighing down growth.

“Relative to other Asian economies that have released their second quarter 2015 GDP growth data, the Philippines is the third fastest growing economy, ahead of Malaysia (4.9 percent), Indonesia (4.7 percent), and Thailand (2.8 percent),” Lacierda said.


MANILA TIMES COLUMN

Still a remittance economy  August 24, 2015 9:51 pm ERNESTO F. HERRERA


by ERNESTO F. HERRERA

LATEST reports from the Bangko Sentral ng Pilipinas (BSP) said a total of $12.08 billion in remittances were sent by overseas Filipino workers from January to June this year, higher than remittances of only $11.45 billion in the first half of 2014.

“Remittances remained robust, partly due to stable demand for skilled Filipinos abroad,” the BSP said.

Whether this administration cares to admit it or not, the billions of pesos worth of liquidity injected into the economy from the foreign-currency earnings of our OFWs is still one of the main pillars of economic growth, not its good governance campaign and certainly not its poor fiscal policies as evidenced by its perennial under-spending.

Indeed, the so-called trickledown effect this and other administrations before it like to brag about from past economic growth surges has never happened.

Despite the Philippine economy’s supposed rapid growth under the Aquino administration, many observers have noted the government’s failure to promote inclusive growth.

Economic growth in this administration has not translated into employment opportunities and poverty reduction.

OFW remittances still provide the growth that matters most in the lives of Filipinos. They go straight to households, to relatives, families and friends that use them to better their lives, to finance food, shelter, education and entrepreneurial pursuits.

The Philippines depends on remittances perhaps more than any country in the world. We are the third highest remittance-recipient country after India and Mexico, and the highest when remittances are measured as ratios to population, GDP and exports, according to Ernesto Pernia of the UP School of Economics.

Money transfers from Filipinos working all over the world account for at least 10-percent of our country’s GDP, the second largest source of foreign capital after value-added exports like electronic components, and a major source of private consumption which in turn accounts for 75-percent of GDP.

Every day about 3,000 Filipinos leave for jobs abroad even if the government officially does not have a labor migration policy.

Remittances virtually made our economy recession-proof as other countries were caught spinning in the global economic downturn that started a few years ago and continues to this day.

Should the Philippines should reduce its heavy reliance on remittances? Surely, but can it? Perhaps never or not totally. We have always been a remittance economy and remittances would continue to be a major growth driver for some time yet.

READ MORE...

So far this government has failed to find other “dependables” to keep the current growth pace of the economy.

I have pointed out previously, for instance, how we need a strong manufacturing sector to provide better quality jobs that could alleviate poverty in the country, all the more important because of the upcoming Asean economic integration.

The devastating impact of a sudden return migration of our OFWs in the troubled Middle East has not materialized, at least not just yet.

The debt problems of most countries in the euro zone, along with the economic problems of the United States did not dampen the demand for Filipino workers and cause remittances to dip or even take a plunge.

There is still a strong demand for our workers and their deployment overseas has hardly been affected by the troubles going on around the world, including those in host countries.

But there is no room to be complacent, which is what this administration has been. While there hasn’t been a massive flood of displaced OFWs coming home, the same unemployment and underemployment situation, which is what drove our workers to seek jobs overseas in the first place, still exists.

Shameless


'The TV advertisements supposedly cost at least P442,000 plus value-added tax every time they are aired for 30 seconds.'

There is nothing ‘tuwid na daan’ about PhilHealth’s decision to sponsor a series of ads featuring former Party-list Rep. Theresia Hontiveros-Baraquel of Akbayan, a staunch ally of President Aquino, who ran for senator but lost in the 2013 elections.

Hontiveros-Baraquel, who took her oath of office as PhilHealth board member only on June 30 this year, has been assured of a slot in the Liberal Party’s Senate slate in the 2016 elections.

PhilHealth should not use its funds to pay for the television advertisements of this soon-to-be administration senatorial candidate.

The money spent by PhilHealth for the TV ads would have been better spent to help upgrade the health-insurance benefits of its members, especially minimum-wage workers and salaried employees.

The TV advertisements supposedly cost at least P442,000 plus value-added tax every time they are aired for 30 seconds.

We must stress that PhilHealth’s governing board has a fiduciary duty to conserve the hard-earned contributions of workers for current and future benefit payments.

The members of the board of directors [of PhilHealth], even if they are all political appointees, are supposed to insulate the state-run insurer and its funds from partisan political activity.

Oh how quickly can so-called activists become coopted against the public interest when they join the administration.

4 Responses to Still a remittance economy

Supsupin says:
August 25, 2015 at 8:43 pm
Let me take this opportunity to tell all OFWs that OUR BELOVED RP IS NOT 100% ECONOMICALLY BENEFITTED BY OUR REMITTANCES…time and time again when article about OFW come about like this, I try to squeeze this “outside the box brainstorming” debacle of magnitude proportion and try to tell our Gov’t to do something about it. We OFWs our sweat and blood that we exchange to earn foreign currencies, our efforts to help our motherland benefit from these foreign currencies (FC) we remit is not 100% transfused to the lifeblood of our economy. Why you may ask……because some if not most of us remit our hard earned FC through some unscrupulous firms masquerading as legit. When remitting through these firms our relatives recieved STALE CASH already in circulation (recycled money) while the FRESH CASH is deposited by these firms in their foreign banks. RP needs FRESH CASH to make robust its economy in order for us to shorten our stay abroad and live with our families, robust economy means jobs for us OFWs in RP.
Taking the numbers in this column $12.08B/3.5MOFW/6mos = $575/OFW average monthly remittance. Isn’t this strapolation looks shievering, the mean average is low (seems like all OFWs are working as MAIDS with this)..and where is the rest? There is my point, some amount we sent home do not reach as FRESH CASH in our banking system.
And our gov’t Finance Dept full with CPAs, CFMs, MBAs, PHDs ( pretty hard d–k) are not looking into this? BOI devise incentives for foreign investors, BSP pays interests on sovereign bonds floated because they need money to service RP debts. OFW remittances are the cheapest source of Funds for RP gov’t, why not device an incentive for OFW remittances? Only the OFWs need to remit through RP gov’t recognized remittance centers abroad, which RP can create by using diplomatic means. There I have given the idea…let the RP gov’t draw the INCENTIVES and OFWs will remit to these remittance centers. OFWs must be INCENTIVIZED not ROBBED and being called HERO for nothing.
Mr. Herrera the trickle down effect of OWFs remittances can be more beneficial to RP if all remittances in form of FRESH CASH reach our country, I hope I can enthused from you Mr. Herrera to further this out-of-the-box thought provoking piece. I will leave my e-mail just in case….rll6358@hotmail.com
Reply
OFW boy says:
August 25, 2015 at 6:21 pm
Shame for all those aspiring Candidates of Pnoy Administration. This Ads for Ms Hontiveros Baraquel is a glaring act committed againts the taxpayers money or Philhealth contributors. It started from Mar Roxas Ads many month ago, saying he is not campaigning but look, he is making Filipinos stupid, my gosh. We can see more Ads this coming months from LP candidate and they will tell you, paid by thier supporters!Who are those supporters? You guess, the money they spent for the ads are taxpayers money.Anyway, LP will not win the Presidency! i can feel it! Filipinos are saying it now, so need for Ads, tapos na ang laban, OFW for BBM!
Reply
kutikut says:
August 25, 2015 at 7:44 am
some malakanyang high ranking lackeys made some ludicrous statement about the “remittances” doesn’t go to the government directly daw, because it goes to the economy! well thank God for that! it would be a different story if the govt. gets hold of it!
Reply
vg says:
August 25, 2015 at 7:08 am
You are correct. Our OFWs keep this countrys economy standing.


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