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Country Insights

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A fork in the road
PHILIPPINES - Forecast 27 May 2019
Going into the second half of the Duterte administration, poll results suggest exceptional executive influence over the legislature that opens up a window which many hope would lead to initiatives that would advance the economic reform agenda, including ramping up the sovereign credit rating to g...

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Deposit reserve requirement ratio cut
PHILIPPINES - In Brief 16 May 2019
The BSP announced today a staggered reduction in the reserve requirement ratio (RRR) on bank deposits as follows: 1ppt effective on May 31, 0.5ppt on June 28, and 0.5 effective July 26. These will bring the RRR for commercial banks, currently at 18%, to 16% by the end of July. A 1ppt cut is estim...

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Election results (2)
PHILIPPINES - In Brief 15 May 2019
A reader asked us what are the implications of Monday’s election results which we outlined yesterday. Offhand, we say that they clearly give President Duterte greater control of the legislative agenda moving forward. The hope is that he will use his political capital to more forcefully back up Fi...

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Election results
PHILIPPINES - In Brief 14 May 2019 1 response
We had expected candidates allied with President Duterte to take most of the contested Senate seats in yesterday’s mid-term elections but it looks like they are slated to take all 12 seats. And while we did not think that the elections should be taken as a referendum on the President and his poli...

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Monetary Board cuts policy rates
PHILIPPINES - In Brief 09 May 2019
With 1Q19 GDP falling below the low end of government’s growth target, the Monetary Board decided today to cut its set of policy rates by 25bp, setting the overnight reverse repurchase rate at 4.5%. The decision is based on a more benign inflation outlook, with the BSP forecasting inflation to av...

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5.6% growth not unexpected (by us)
PHILIPPINES - In Brief 09 May 2019
As we had feared, GDP growth fell to 5.6% in 1Q19, below even the low end of government’s downscaled 6-7% target for the year and much lower than the 6.1% median analyst forecast. Officials were quick to point the finger at the delayed passage of government’s 2019 budget, which capped the growth ...

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April inflation lower at 3%
PHILIPPINES - In Brief 07 May 2019 1 response
Inflation continued to decelerate to 3% in April, slower than the 3.3% print in March 2018 and below the 3.1% expected by analysts. Although the headline rate fell, month-on-month inflation increased to 0.3% from nil in March, traced mainly to oil-related fuel and transport costs. In comparison, ...

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Finally, government has a budget
PHILIPPINES - In Brief 15 Apr 2019
Hours after we wrote our last brief, reports say that the President has finally ratified the 2019 General Appropriations Act. He did what many thought was the appropriate thing to do, i.e., vetoed items that were not part of government's priorities. The vetoed programs/projects, reportedly public...

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Still no budget for 2019
PHILIPPINES - In Brief 15 Apr 2019
The suspense continues. After much wrangling in congress that resulted in the Senate transmitting the enrolled bill with “strong reservations” to Malacanang only in late March, the proposed 2019 budget remains unsigned to date. At this point, the choices before President Rodrigo Duterte are to: (...

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​Inflation drops to 3.3%
PHILIPPINES - In Brief 05 Apr 2019
Inflation continued to fall sharply to 3.3% in March from 3.8% in February and 4.4% in January. The latest inflation print is below the 3.5% market consensus. The overall price level was unchanged from last month, with declines in the prices of key food commodities such as fish, vegetables, and r...

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Duterte orders contracts review
PHILIPPINES - In Brief 03 Apr 2019
President Rodrigo Duterte’s order to review contracts entered into by the government with the private sector and foreign governments has met with no small amount of unease not only among its private sector partners in infrastructure projects but also among those worried about its impact on percep...

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Coming soon: monetary easing 2
PHILIPPINES - In Brief 20 Mar 2019
The signal from BSP Governor Benjamin Diokno was clear, i.e., there is room for monetary easing. But will the Monetary Board cut policy rates when it meets tomorrow? Very unlikely, in our view. What we think will happen is a resumption of its policy to reduce the reserve requirement ratio (RRR) o...

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Growth target downgraded
PHILIPPINES - In Brief 14 Mar 2019
Yesterday, economic managers downgraded their GDP growth target for 2019 from 7-8% to 6-7%, blaming the continuing delay in the passage of the national budget. The budget, which was supposed to have been transmitted for the President’s signature early this month, hit an unexpected snag when the S...

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Coming soon: monetary easing
PHILIPPINES - In Brief 12 Mar 2019
In a one-on-one interview with the country’s best-known business journalist on television, the new BSP Governor Benjamin Diokno noted that falling local inflation plus the more dovish stance of developed economies’ central banks provide room for monetary easing, especially following last year’s 1...

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Inflation now within target
PHILIPPINES - In Brief 05 Mar 2019
As we had expected, inflation fell from 4.4% in January to 3.8% in February, within the BSP’s 2-4% target. The month-on-month inflation rate was steady at 0.2, mainly reflecting the impact of higher oil fuel prices, including the contribution of higher excise taxes on oil. Food prices meanwhile c...