Inflation falls to 4.1% (Part 2)

According to the Institute for Development and Econometric Analysis, Inc. (IDEA) latest NewsBriefs, merchandise exports stood at USD4.382 billion in January, posting a 9.3-percent increase from the USD4.011 billion recorded in the same period last year. The increase was driven by the expansion of seven major commodity groups. Receipts from electronic products was at USD1.793 billion, higher by 22.1 percent from the USD1.469 billion recorded in January 2013. Despite this, its major component, semiconductors, posted a 3.6-percent decline to USD1.155 billion. Receipts from other manufactures increased by 99.5 percent to USD600.25 million from USD300.92 million. Woodcrafts and furniture also increased by 1.3 percent to USD291.70 million while machinery and transport equipment recorded a 17.0 -percent increase to USD207.34 million. Metal components rose by 53.1 percent to USD182.10 million while articles of apparel clothing and accessories, and electronic equipment and parts increased by 45.7 percent and 89.7 percent, respectively.

Broken down, Japan accounted for 26.3 percent of the country’s total exports, remaining the top destination of exports. This was followed by the US, which accounted for 13.8 percent, China with a 9.9 -percent share, Singapore, which accounts for 8.8 percent of total exports and Hong Kong, with a 7.5-percent share in total exports.

Furthermore per IDEA, Central bank officials are optimistic about a possible upgrade in the country’s credit rating. This was based on the positive outlook that the country received from Moody’s Investors Services and a possible positive assessment from Fitch Ratings. Moreover, in terms of macroeconomic fundamentals, the country is much more stable that other Asian countries, seen in the lower debt spread and lower debt-to-GDP (gross domestic product) ratio, current account and balance of payments surplus and growth.

Likewise, the country’s fiscal deficit for 2013 was at PhP164 billion, amounting to 1.4 percent of the gross domestic product, and falling short of the government’s 2 percent target. According to Citi research, the decline in debt was driven by a decline in government spending, particularly spending on infrastructure. While spending increased during the last months, driven by relief operations on areas affected by super typhoon Yolanda, spending on infrastructure still declined in the fourth quarter last year.

Per same published report, analysts from the HSBC estimate that the country’s growth will slow down this year due low infrastructure investments. Estimates show that the country will grow at 5.8 and 6 percent for 2015 and 2016, respectively, below the government’s 7-to-8-percent and 7.5-to-8.5-percent growth target. Despite the strong macroeconomic fundamentals of the country, studies have pointed out that the underdeveloped infrastructure in the country is one of the main hurdles to growth.

Lastly, according to the Philippine Statistical Authority (PSA), unemployment increased to 7.5 percent in January from the 7.1 recorded in the same period last year. Officials from the National Economic Development Authority attributed this to the disasters that the country experienced last year, specifically the earthquake in Bohol and super typhoon Yolanda. Meanwhile, underemployment declined to 19.5-percent from 20.9-percent recorded in comparative periods according to IDEA.

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