three-time rotary club of manila journalism awardee 2006, 2010, 2012
U.N. Media Award 2008
BusinessMirror
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week ahead
ECONOMIC DATA PREVIEW
Foreign exchange
n Previous week: The local currency showed a continuous appreciating trend in the previous week coming from the upper end of the 44 territory down to the lower end. The trading week started on Tuesday, as Monday was declared a trading holiday due to the pope’s state and pastoral visit to the Philippines. The peso opened the week at 44.61 against the greenback, then appreciated to 44.4 to a dollar on Wednesday. The currency continued to trace a strong peso trend to hit 44.32 to a dollar on Thursday, and ended the week at 44.18 to a dollar. Friday’s close was the strongest for the peso since September last year. The total traded volume is at $3.2 billion, larger than last week’s $2.1 billion. n Week ahead: In a chance interview with BDO Unibank Inc. chief market strategist Jonathan Ravelas, he said the appreciating trend in the previous week is part of the market’s correction. He further said the bias for a strong dollar is still on the horizon. Markets are expected to look forward to the upcoming local data, although most of them will still come at the end of the week. Ravelas said, for the upcoming week, the peso is likely to range still within the lower band of the 44 territory.
GDP (fourth quarter) January 29 (Friday)
n Q3 GDP: The local economy posted a weaker-than-expected growth in the third quarter of last year at 5.3 percent. The government pointed to the slump in agricultural production and the national government’s inability to disburse the funds See “Outlook,” A2
A broader look at today’s business
n Sunday, January 25, 2015 Vol. 10 No. 108
P25.00 nationwide | 6 sections 28 pages | 7 days a week
Slowing growth trend won’t affect PHL credit rating–S&P
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By Bianca Cuaresma
HE country’s economy can now heave a sigh of relief. The Philippines’s slowing growth trend, as seen from 2013 to the first three quarters of 2014, will have no negative impact on the much-celebrated credit-rating upgrades that the country has received in recent times, an international credit watcher said. In its Asia-Pacific 2015 sovereign rating trends webcast, major credit watcher Standard & Poor’s (S&P) said the country will not be seeing any downgrade even if its growth slowed down by about 1 or 2 percentage points, alleviating the fears that the country might return to junk status because it was not able to sustain its high growth rate. “It is quite straightforward.... This growth trajectory, despite being slower than what we saw, does not affect the ratings negatively,” S&P Senior Director Kim Eng Tan responded, when asked if the country is poised for a downgrade with its slowing growth. Kim, however, warned that if the government institutes structural changes that will cause the fiscal and economic stability to falter, then that could trigger a downgrade. Tan also bared that S&P expects growth to be within the 6-percent territory this year and the next, and is seen to grow “even below that” in 2017. These rough estimates of S&P are all below the government’s tar-
Oil Falls to Lowest Since March 2009 as Saudis Signal Continuity
TAN: “This growth trajectory, despite being slower than what we saw, does not affect the ratings negatively.”
gets set for each year, and are contradictory to the projected path of the economic managers of the country, which is geared on an upward trend. The Philippine economy has completed the first ascent to the investment-grade ladder in 2013, when the country has been hitting a growth rate of about 7 percent—except on the fourth quarter of that year, when the economic gowth fell to about 6 percent, owing to the disruptions caused by Supertyphoon Yolanda (international code name Haiyan). It was during that year when all three major credit watchers— Moody’s Investors Service, Fitch Ratings and S&P—lifted the country from the junk status. See “Growth,” A2
Money supply, loan growth won’t fuel asset bubble
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HE current level of money supply and high loan growth is deemed enough to power the economy without fueling asset bubbles, an economist said. In the recent Philippine Economic Briefing at the Ateneo Professional Schools campus in Makati City, an Eagle Watch member, Alvin Ang, said that the current money-supply growth is enough to sustain the country’s growing gross domestic product. The Eagle Watch is the economic research and forecasting arm of the Ateneo Economics Department. Latest data from the central bank showed that the monetary growth of the country decelerated to 9 percent in November
2014, owing to the central bank’s measured adjustments in the monetary-policy settings. In absolute terms, the cash circulating in the country is about $7.43 trillion during the latest recorded period. November’s cash-supply growth is the slowest for the country in more than two years, or since October 2012, when it hit an 8.7-percent growth. The month’s expansion rate is also now below the Bangko Sentral ng Pilipinas’s target range of M3 growth toward the end of the year, at around 18 percent to 15 percent, as earlier said by central bank officials. Ang also noted that, although the growth of bank lending in the country is still in the double-digit
PESO exchange rates n US 44.3610
pace, it does not pose a risk, as it is being more diversified and channeled to productive sectors in the economy. Last year economists and analysts expressed worries on the country’s money-supply growth, which peaked at about 30 percent in the first quarter of 2014. Experts feared that high monetary growth would stoke inflationary pressures and, therefore, cause instability to prices and disrupt the country’s financial stability. This prompted the central bank to implement tightening measures to tame cash-supply growth and inflation. The country’s end-2014 cash supply growth will be released on January 30. Bianca Cuaresma
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By Moming Zhou | Bloomberg
il fell to the lowest in almost six years on speculation that the death of King Abdullah of Saudi Arabia won’t signal any change in strategy for the world’s largest crude exporter.
US benchmark oil futures slid 1.6 percent, reversing an initial gain of as much as 3.1 percent. Salman Bin Abdul-Aziz Al Saud, who succeeds Abdullah on the throne, said he would maintain his predecessor’s policies (See related stories on pages C2 and C3). The Kingdom will not cut production to boost prices because other producers would fill See “Oil,” A2
n japan 0.3741 n UK 66.5238 n HK 5.7234 n CHINA 7.1441 n singapore 33.1052 n australia 35.9868 n EU 50.2965 n SAUDI arabia 11.8094 Source: BSP (23 January 2015)