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THE ECONOMY AT A GLANCE
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ECONOMIC INDICATOR | Latest | Date Updated | End-2009 |
| I. FINANCIAL MARKETS |  | | |
Interest rates (%)
91-day T-bills
Auction result
PDST-R2* |
3.936
4.0906 |
23-Aug
02-Sep |
4.186
4.067 |
182-day T-bills
Auction result
PDST-R2* |
4.302
4.3800 |
23-Aug
02-Sep |
3.303
4.350 |
364-day T-bills
Auction result
PDST-R2* |
4.562
4.5066 |
23-Aug
02-Sep |
4.580
4.750 |
Exchange Rate (US$1/PHP)
Closing
Average for the month
YTD average |
44.950
46.2810
45.8130 |
02-Sep
Jul-2010
Jul-2010 |
46.200
47.624 |
| II. ECONOMY | | | |
| GDP (%) (at constant prices) | 1.1 | 2009 | 1.1 |
Inflation Rate (%)
| 3.9 | Jul-2010 |
3.2
|
4.2 | Jan-Jul 2010 |
| Unemployment Rate (%) | 8.0 | Q2 2010 | 7.5 |
Budget Deficit (in Billion Php)
Ratio to GDP | (34.6)
(196.7)
(3.9) | Jun-2010
YTD
Q4-2009 |
(298.5) |
OFW Remittances (in Thousand US$)
| 1,623,638 | Jun-2010 |
17,348,052
|
9,062,183 | Jan-Jun 2010 |
Foreign Direct Investments (in Million US$)
| (35.00) | May-2010 |
1,948.00
|
446.00 | Jan-May 2010 |
Tourist Arrivals
| 312,132 | Dec-2009 |
3,017,099
|
3,017,099 | Year-to-date |
| *Philippine Dealing System Treasury-R2 | | | |
| Sources: BSP, NEDA, NSO, BTR/DOF, DOT, BPI-Treasury |
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Date Updated: August 31, 2010
Economy
July Inflation Remains at 3.9%
The annual headline inflation rate in July 2010 remained at its June figure of 3.9%. Higher annual growth rates posted in food, beverages and tobacco (FBT), housing and repairs (H&R) and services were offset by the slower increments in fuel, light and water (FLW) and miscellaneous items. Excluding selected food and energy items, core inflation picked up to 3.9% in July from 3.8% in June. (National Statistics Office)
National Government Achieves Primary Surplus in July at P10.1 Billion
The National Government (NG) recorded a primary surplus in July 2010 amounting to P10.1 billion due to higher revenue collections that more than covered the operating expenditures for the month. This was a reverse of the primary deficit of P24.3 billion recorded in June 2010 and a 132% improvement over the recorded deficit in July 2009. The primary surplus for July translated to a decline in primary deficit from P50 billion for the first semester to P40.0 billion for January to July.
Meanwhile, the January to July 2010 fiscal deficit amounted to P229.4 billion, which comprised 70.6% of the deficit ceiling for 2010. Fiscal deficit in July 2010 alone amounted to P32.7 billion.
Revenue collections for January to July 2010 rose 7.9% to P695.0 billion from P644.1 billion for the same period in 2009. BIR and BOC collections amounted to P620.3 billion or about 89% of total.
Total disbursements for the first seven months of 2010 amounted to P924.4 billion, 11% higher than the comparable disbursements in 2009. Excluding interest payments, disbursements increased by 13%. Actual disbursements in July amounted to P135.6 billion. (Bureau of Treasury, Business World)
May 2010 Total Trade Stands at $8.994 Billion
Total external trade in goods for January to May 2010 reached $41.185 billion - a 36.9% increment from $30.090 billion registered during the same period in 2009. Total imports posted a 35.3% annual increase to $22.019 billion, while exports posted an increase of 38.7% to $19.166 billion. The balance of trade in goods (BOT-G) for the Philippines posted a deficit of $2.854 billion during the 5-month period in 2010, a value higher than the $2.455 billion deficit in the same 5-month period last year.
For May 2010 alone, combined import and export merchandise trade improved 34.1% to $8.994 billion from $6.705 billion in May 2009. This was due to the double-digit increase in total merchandise imports at 31.4% to $4.753 billion. Total exports likewise rose 37.3% to $4.241 billion. The top five imports were: Electronic Products (32.2% of the aggregate import bill, went up 17.7% to $1.299 billion), Mineral Fuels, Lubricants and Related Materials (21.7% share, grew 103.8% to $1.029 billion), Cereals and Cereal Preparations (4.9% share, contracted 32.8% to $234.55 million), Metalliferous Ores and Metal Scrap (4.5% share, up 508.3% to $212.12 million), and Transport Equipment (4.4% share, increased 44.6% to $211.06 million).
Payments for imports from the top ten sources for May 2010 amounted to $3.652 billion or 76.8% of total. Some of these were: Singapore (11.1% share of the total import bill), Japan (10.2% share), Saudi Arabia (10.1% share), USA (7.6% share), and China (7.9% share). (National Statistics Office)
Merchandise Exports for June 2010 Up By 33.4%
Export earnings in June 2010 amounted to $4.545 billion – 33.4% higher than June 2009’s $3.407 billion and 7.2% higher than May 2010’s $4.241 billion. Aggregate merchandise exports from January to June 2010 also showed an increase of 37.7% to $23.711 billion from $17.225 billion posted during the same 6-month period in 2009.
Total receipts from the top ten exports reached $3.592 billion, or 79.0% of total exports. The top five products were: Electronic Products (63.9% of the total export revenue, grew 49.1% to $2.904 billion), Articles of Apparel and Clothing Accessories (3.4% share, grew 9.6% to $152.36 million), Coconut Oil (2.1% share, increased 56.6% to $95.62 million), Ignition Wiring Set and Other Wiring Sets Used in Vehicles, Aircrafts and Ships (2.1% share, grew 34.2% to $94.27 million), and Woodcrafts and Furniture (2.0% share, increased 4.8% to $88.63 million).
Total export receipts from RP’s top ten markets for the month of June 2010 amounted to $3.959 billion or 87.1% of the total. Some of these were: Singapore (16.5% of the total exports), USA (16.4% share), Japan (14.5% share), Hong Kong (8.9% share), and China (8.9% share). (National Statistics Office)
Foreign Portfolio Investments Post Net Inflow in July 2010
Transactions in BSP-registered foreign portfolio investments posted a net inflow of US$14 million for July 2010, reflecting a substantial improvement from the US$86 million net outflow recorded in June 2010, although a 78% decline was noted compared to the US$66 million net inflow in July 2009. The month-on-month improvement resulted from positive developments on the domestic front including lower inflation rate, a stable peso and a more positive outlook with the assumption of the new administration.
For the first seven months of 2010, transactions yielded a net inflow of US$701 million - 164% higher than the US$265 million net inflow for the comparable period in 2009. Registered investments aggregating US$5.0 billion were up 37% from 2009’s US$3.6 billion. Investments in PSE-listed shares of US$3.4 billion exceeded 2009’s US$2.8 billion level by 24%, with major beneficiaries consisting of banks (22%); property companies (20%); telecommunication companies (19%); holding firms (17%); and utility firms (12%). The United States, United Kingdom, Singapore, Malaysia, and Luxembourg comprised the top five (5) investor countries, contributing 84% to total registered investments.
Year-to-date outflows, which were mostly withdrawals from interim peso deposits (IPDs), reached US$4.3 billion compared to US$3.4 billion in 2009. Sales proceeds of BSP-registered investments, including earnings thereon, may be placed in IPDs pending subsequent reinvestment or repatriation/remittance. (Bangko Sentral ng Pilipinas)
Foreign Direct Investments Yield Net Inflows In First Five Months of 2010
Foreign direct investments (FDI) for the first five months of 2010 recorded a net inflow of US$446 million - 68.0% lower than the same period in 2009. Investors stayed on the sidelines as they remained wary of potential spillovers of the Eurozone’s sovereign credit problems, notwithstanding the relatively peaceful conduct of the May 2010 local elections. For May 2010 alone, FDI posted a net outflow of US$35 million.
FDI net inflows for January-May 2010 stemmed largely from the improvement in the other capital account consisting mainly of intercompany borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines. These reversed to a net inflow of US$330 million from a net outflow of US$38 million in 2009.
Net inflows of equity capital during the five-month period summed up to US$46 million, considerably lower than the US$1.5 billion recorded during the comparable period in 2009. Inflows during the review period came mostly from the U.S., Switzerland, Japan, Netherlands, Singapore and Hong Kong. These were directed to the manufacturing, services, real estate, financial intermediation, utilities, mining, and transportation/storage sectors.
Reinvested earnings recorded net inflows of US$70 million, a reversal of the US$24 million net outflows posted in 2009. (Bangko Sentral ng Pilipinas)
OF Remittances Continue to Rise in June: Six-Months Level at US$9.1 Billion
Remittances from overseas Filipinos (OFs) coursed through banks in the first half of 2010 amounted to US$9.1 billion, posting a year-on-year growth of 6.9%. In June 2010 alone, remittance flows peaked at US$1.6 billion, reflecting a year-on-year expansion of 8.3%, boosted by remittances from both sea-based and land-based workers.
The continued deployment of professional and skilled Filipino overseas workers, given favorable global employment opportunities, underpinned the resilience of remittances. Preliminary data obtained from the POEA indicated that workers classified as new hires with processed contracts and are awaiting deployment rose 13.5% to 212,700 for the period January-June 2010 from 187,338 in the same period in 2009. For the first seven months of 2010, approved job orders aggregated 356,878, of which more than a third consisted of processed job orders for service, professional, technical, and production and related workers. Work prospects overseas for Filipino seafarers were also reported by the DOLE following plans of the Japanese Shipowners’ Association (JSA) to hire 2,000 sea-based workers as officers and crew of high-end Japanese vessels in the next two years.
Meanwhile, the continued expansion in the number of banks’ branches, remittance centers and correspondent banks and tie-ups has resulted in the stronger presence of financial institutions abroad which, in turn, helped capture a bigger share of the global remittance market. As of June 2010, these remittance conduits totaled 4,351 compared to 3,730 in 2009.
The bulk of total remittances (81.7%) reported by local banks were sourced mainly from the U.S., Canada, Saudi Arabia, Japan, the U.K., Singapore, United Arab Emirates, and Italy. (Bangko Sentral ng Pilipinas)
End-July 2010 GIR Stands at US$48.6 Billion
Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed that the country’s gross international reserves (GIR) level as of end-July 2010 reached US$48.6 billion, slightly lower by US$0.1 billion than end-June 2010 level of US$48.7 billion. The lower level of reserves at end-July 2010 arose mainly from revaluation losses on the BSP’s gold holdings on account of the decline in the price of gold in the international market, payments by the National Government (NG) for its maturing foreign exchange obligations, and foreign currency withdrawals by authorized agent banks (AABs). These outflows were offset, however, by receipts from the foreign exchange operations of the BSP and income from its investments abroad, as well as the NG’s foreign currency deposits with the BSP.
The current GIR level could cover 9.0 months of imports of goods and payments of services and income. It is also equivalent to 9.3 times the country’s short-term external debt based on original maturity and 5.1 times based on residual maturity. (Bangko Sentral ng Pilipinas)
Domestic Liquidity Growth Broadly Steady in June
Domestic liquidity (M3) grew 10.3% year-on-year (y-o-y) in June 2010, broadly similar to May 2010’s growth of 10.7%. On a monthly basis, seasonally-adjusted M3 growth decelerated to 0.3% in June from 2.2% (revised) in May.
The sustained rise in net foreign assets (NFA) drove the expansion in domestic liquidity. NFA grew 22.7% y-o-y in June 2010 from 19.0% in May 2010, due largely to the continued expansion in the BSP’s foreign assets at 22.5%. In addition, the NFA of other depository corporations rose 23.8% from 9.6% in May 2010 as banks continued to accumulate foreign assets.
Meanwhile, net domestic assets (NDA) contracted further by 0.9% in June 2010 as the steady expansion of the net other items account (which includes revaluation and capital and reserve accounts and SDA placements of trust entities) pulled down domestic liquidity. However, net domestic credits strengthened further as lending to both the public and private sectors grew steadily. Credits extended to the public sector increased 9.4% in June 2010, buoyed up by the 21.3% growth in credits extended to local governments and other public entities. Credits extended to the private sector similarly rose 8.1%, consistent with the observed uptrend in bank lending activities. (Bangko Sentral ng Pilipinas)
Banking
Bank Lending Expands Further in June
Bank lending, net of banks’ reverse repurchase (RRP) placements with the BSP, grew at a faster pace of 9.6% in June 2010 from the growth of 8.1% in May 2010. Outstanding loans of commercial banks including RRPs also continued to grow, albeit at a slower pace of 5.5% relative to the month-ago expansion of 7.7%, to reach P2.4 trillion. On a month-on-month, seasonally-adjusted basis, commercial banks’ lending in June grew 1.1% for loans net of RRPs but declined slightly by 0.8% for loans inclusive of RRPs.
The growth of loans for production activities—which comprise around four-fifths of commercial banks’ total loan portfolio—accelerated to 9.3% in June 2010 from 7.9% in May 2010. Similarly, loans for household consumption (credit card, auto loans and others) expanded at a faster pace of 13.0% from 10.3% in May.
The growth of production loans was traced to increased lending to agriculture, hunting and forestry as well as to real estate, renting and business services (both of which grew 13.4%). Lending to the electricity, gas and water sector picked up considerably, expanding 23.7% year-on-year. Lending to manufacturing grew at faster rate of 5.6% in June compared to the 2.2% expansion in the previous month while growth in lending to construction activities remained double digit at 18.7% from 27.5% in May 2010. Contractions in bank lending were seen in only two sectors: fishing (-30.5%) and other community, social and personal services (-22.3%). (Bangko Sentral ng Pilipinas)
U/KBs’ NPL Ratio Improves Anew to 3.27% in June
As of end-June 2010, the non-performing loans (NPL) ratio of universal and commercial banks (U/KBs) improved by 0.10 percentage point to 3.27% from May 2010’s 3.37% and by 0.09 percentage point from June 2009’s 3.36% ratio. This is the twenty-first consecutive month that the NPL ratio has been below 4%. The month-on-month development occurred as the 1.21% hike in NPLs was outpaced by the 4.29% rise in total loan portfolio (TLP). NPLs rose to P87.67 billion from last month’s P86.62 billion while TLP grew to P2,681.90 billion from P2,571.48 billion.
In terms of provisioning for bad loans, the NPL coverage ratio narrowed to 108.81% from May 2010’s 109.97%. Similarly, the NPA coverage ratio slid to 57.01% from May 2010’s 57.03%. Nonetheless, this month’s NPL and NPA coverage ratios still fared better than June 2009’s ratios of 102.33% and 50.59%, respectively. (Bangko Sentral ng Pilipinas) |
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| The information contained herein is based on sources which we believe are reliable but is not guaranteed by us. This report is provided for information purposes only and should not be construed as an offer or solicitation of an offer to buy or sell the security or currency mentioned herein. BPI and its affiliates may from time to time have positions and may buy or sell the security or currency described herein.
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Member: PDIC. Maximum Deposit Insurance for Each Depositor P500,000
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