Medalla to markets: Another rate hike in Aug By Bianca Cuaresma @BcuaresmaBM
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ANGKO Sentral ng Pilipinas (BSP) Governor Felipe Medalla assured markets on Tuesday of another rate hike in their scheduled meeting in August after the surprise 75 basis points rate hike earlier this month. Speaking at the post-State of the Nation Address (SONA) Economic Briefing, the BSP chief said the hike will be to the tune of 25 basis points or 50 basis points, depending on the latest data on the economy at that time. “We can surprise people only once. So there will be no more offcycle. As to how many more rate hikes before the end of the year,
that will be very data dependent,” Medalla said. “Come this August meeting, we can rule out zero and we can rule out 75 basis points. For the rest of the year, it all depends on what will happen in the outside forces,” he added. The governor, who took the BSP helm a few weeks ago, said they are currently playing a “balancing act” in deciding the magnitude of further rate hikes for the rest of the year. “On one hand, the current drop in the prices of oil—which is now below $100 [per barrel]—signals that there is less need for rate hikes. On the other hand, the US is surely going to raise its policy rate by 75 basis points,” he said.
“Too much depreciation of the peso—or what we economists call ‘overshooting’—could actually add to an inflation that is already high. So these are the things that we are balancing,” Medalla added. The governor also defended their decision earlier this month to raise interest rates in an unscheduled meeting by 75 basis points, deviating from their earlier policy guidance of a “gradual” and “well-communicated” fashion of monetary policy support exit. “Much of our inflation is what we call the supply side. And a big part of it is imported. But we have to act because what we are afraid of is that this imported inflation will have a life of its own and start a self-fulfilling prophecy of prices
rising because prices are rising,” Medalla said.
Still growth-friendly
AMID their more aggressive monetary policy tightening, the governor said the current monetary policy still remains supportive of economic growth. “75 basis points was considered large. However, when you look at it, our monetary policy is still very supportive of economic growth. Indeed, the policy rate—which used to be a record low 2 percent— is now just around 3.25 percent. So, by and large, the economy can absorb the increase in the policy rate,” Medalla said. See “BSP,” A2
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Wednesday, July 27, 2022 Vol. 17 No. 292
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FACING HEADWINDS, PHL BARES ECONOMIC AGENDA n
By Bernadette D. Nicolas
Stakeholder groups cheer Marcos Jr.’s tourism thrust
@BNicolasBM
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HE Marcos administration unveiled on Tuesday its 8-point socioeconomic agenda to address headwinds including soaring consumer prices, and to bring back the “high-growth trajectory” of the economy. Finance Secretary Benjamin E. Diokno, the head of the administration’s Economic Development Cluster, presented the 8-point socioeconomic agenda bearing nearterm and medium-term plans for the country to achieve a robust economy as well as an inclusive and resilient society. With this, Diokno said the country is “fully prepared to address the challenges ahead.” “Inflation is expected to remain elevated for as long as world prices of oil and other key commodities remain high. The effects of the pandemic linger while the global political economy remains unpredictable,” he said during the Marcos administration’s first post-State of the Nation Address economic briefing at the Philippine International Convention Center in Pasay. “The Marcos administration will implement a comprehensive 8-point socioeconomic agenda to decisively respond to these risks and steer the economy back to its high-growth trajectory,” he added. Diokno said their near-term plans will address the immediate challenges faced by Filipinos. Under their near-term agenda, the economic team aims to protect the purchasing power of families in response to rising prices, mitigate scarring from the Covid-19 See “Economic,” A2
By Ma. Stella F. Arnaldo
@akosistellaBM Special to the BusinessMirror
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FOR GOOD HEALTH Pasig City Mayor Vico Sotto together with Pasig City Lone Dist. Rep. Roman Romulo and MMDA Officer-in-Charge, Director Baltazar Melgar, check recreation facilities during the inauguration of the linear park at Brgy. Buting, Pasig City on July 26, 2022. The linear park is part of the MMDA’s Adopt-a-Park project, to provide a playground for children and exercising devices for adults. NONOY LACZA
MEETING GROWTH GOALS TO BOOST PHL’S UMIC BID By Cai U. Ordinario
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@caiordinario
F the Philippine economy attains the government’s economic targets this year and next year, the average per capita income in the country could increase to over $4,000 annually by 2024, according to the National Economic and Development Authority (Neda). At the Post-State of the Nation Address (SONA) Economic Briefing
on Tuesday, Socioeconomic Planning Secretary Arsenio M. Balisacan said attaining a per capita income level of $4,250 or even $4,300 would be possible at the target growth rates. The national government aims to grow the Philippine economy by 6.5 percent to 7.5 percent this year and 6.5 percent to as high as 8 percent next year. These targets, set by the Development and Budget Coordination Committee (DBCC), were also reiterated by the President in his SONA on Monday.
“At the rate we are growing and assuming that we achieve the 6.5 to 7.5 percent growth this year and the 6.5 to 8 percent next year, we should be reaching that minimum of $4,250 in 2024. By that time, we will become a member of the so-called upper middle income class. That will mean that the size of the economic pie will be bigger,” Balisacan said. Based on the World Bank’s country classification, the Philippines remains a lower middle income country which
has an average per capita income of between $1,086 and $4,255 in 2021. This is based on the 2023 calculations made by the World Bank using the Atlas Method, which also takes into consideration exchange rates. The same method leads to a per capita income estimate of between $4,256 and $13,205 for upper middle income countries and $13,205 or more for high-income economies.
HE Department of Transportation (DOTr) will identify particular airports that need to be upgraded, to help improve the access of travelers to tourism destinations in the country. This developed as national tourism groups welcomed the goal of President Ferdinand Marcos Jr. to help the tourism sector recover and regain its place as a driver of economic growth. In a news statement, Transportation Secretary Jaime J. Bautista said he “feels challenged” by President Ferdinand Marcos Jr.’s instruction to modernize the country’s transport facilities, especially those relating to aviation, during the latter’s first State of the Nation Address (SONA) on Monday. (See, “Marcos wants tourism to drive GDP, jobs,” in the BusinessMirror, July 25, 2022.) A former president of pioneering flag carrier Philippine Airlines (PAL), Bautista vowed to prioritize the enhancements of various airports and elevate them to global standards. “We will build upon the dozens of aviation-related projects completed in the past administration and identify areas for technical
See “Neda,” A2 See “DOTr,” A2
PESO EXCHANGE RATES n US 56.1840 n JAPAN 0.4111 n UK 67.6961 n HK 7.1580 n CHINA 8.3211 n SINGAPORE 40.5339 n AUSTRALIA 39.0816 n EU 57.4369 n KOREA 0.0429 n SAUDI ARABIA 14.9529 Source: BSP (26 July 2022)