From the Front Page: Military takes over Customs, business leaders react

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Amid expectations of a slower inflation rate moving towards the end of 2018, BSP Deputy Governor Diwa C. Guinigundo said another rate hike is still on the table, saying “we need to maintain our vigilance with a strong tightening bias.” The BSP estimates 2018 inflation to settle at 5.2% before easing to 4.3% next year.

Despite this, the ASEAN+3 Macroeconomic Research Office says Philippine economic growth prospects remain strong. To sustain its robust growth, authorities should pay attention not only to inflation, but also to tightening global financial conditions and rising trade tensions when recalibrating policy to respond to risks and maintain stability.

Bad debts held by big banks grew 8.4% year-on-year in August, with non-performing loans reaching P112.94 billion. A faster 17.9% increase in total loans, however, means that the share of soured debt to total loans dropped 0.12 percentage points to 1.34%, a more manageable level for lenders.

In the real estate sector, these big banks still have room to grow as exposure levels are still well below the 20% limit set by the central bank. Real estate loans and investments accounted for 13% of universal and commercial bank portfolios as of the end of June — fairly manageable, the central bank said.

President Rodrigo R. Duterte’s decision to place the Bureau of Customs under military control drew flak from public servants questioning its constitutionality. Business leaders generally welcomed the move to clean up Customs, but were wary of a possible “lack of business sense” at the helm.