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About 4% of US adults age 65 and older have a dementia diagnosis, survey finds

STOCK PHOTO | Image by Gerd Altmann from Pixabay

Some 4% of US adults aged 65 and older say they have been diagnosed with dementia, a rate that reached 13% for those at least 85-years old, according to a report of a national survey released on Thursday.

The report issued by the US Centers for Disease Control and Prevention (CDC) was based on the 2022 National Health Interview Survey, a nationally representative sample of U.S. adults aged 18 and older. The survey in 2019 added the option to report dementia, including Alzheimer’s disease, to its questions on doctor-diagnosed health conditions.

The CDC said 1.7% of adults ages 65 to 74 reported a dementia diagnosis, a rate that increased with age. For those ages 75 to 84, the reported dementia rate was 5.7%

The agency conducted in-person or telephone interviews with 8,757 people age 65 and older who were asked whether they have been diagnosed with some form of dementia.

Ellen Kramarow, the report’s lead author, said dementia diagnosis estimates were in general similar from 2019 to 2022, adding that they “do not see this as a measure that is going to have large changes year to year.”

Alzheimer’s is the leading cause of dementia, which involves the loss of memory, language, problem-solving and other cognitive abilities severe enough to interfere with daily life, according to the Alzheimer’s Association.

The report accompanies the arrival of new treatments designed to slow progression of the mind-wasting disease, such as Biogen and Eisai’s Leqembi, which won US approval last July. Eli Lilly’s similar treatment, donanemab, was unanimously endorsed by an advisory panel to the U.S. Food and Drug Administration on Monday and is widely expected to be approved.

The CDC report showed dementia diagnoses were lowest among people with college degrees and highest among people with less than a high school education.

Several studies have suggested that people with higher levels of education have larger cognitive reserves that can temporarily delay dementia symptoms.

The overall estimates are similar to other national surveys, such as the 2021 Medicare Current Beneficiary Survey, which estimated that nearly 3% of Medicare beneficiaries not residing in nursing homes or long-term care facilities had a diagnosis of Alzheimer’s or another type of dementia. – Reuters

Japan’s Honda to start selling micro-sized electric vans in October

TOKYO – Honda Motor will start selling a micro-sized electric van targeted at Japan’s delivery industry in October, the Japanese automaker said on Thursday, joining an increasingly crowded part of the market.

The small electric commercial van will have a cruising range of 245 km (152 miles), the company said in a statement. It will be classed as a “kei” vehicle, which are low-powered, low-taxed domestic vehicles.

The launch of the new model comes as Japan’s second-biggest automaker by volume separately plans to start selling an electric kei passenger car next year.

Honda is a powerhouse in Japan’s substantial market of kei micro-sized cars. Its N-Box model has long topped the ranks of Japan’s kei passenger vehicle market.

Micro kei vehicles are hugely popular among businesses and households to deliver agriculture produce, parcels and other goods in urban areas and the countryside in Japan, in part due to their relatively cheap price.

The roll-out comes months after Toyota Motor delayed the launch of a small electric van that it is developing with Suzuki Motor and Daihatsu, following a safety test scandal at Daihatsu.

Mitsubishi Motors Corp. in December 2023 relaunched its own small commercial van, Minicab EV.- Reuters

Japan’s beloved cats get healthcare help from AI

STOCK PHOTO | Image by Gundula Vogel from Pixabay

TOKYO – Mayumi Kitakata frets about the health and wellbeing of Chi, her stoic housemate who enjoys treats, indulges a bit too much in the catnip, and about 14 is getting on in years for a feline.

Ms. Kitakata, 57, has had pet cats come and go over the years, and to help give Chi as many seasons as possible, she’s turned to artificial intelligence.

In March, Ms. Kitakata became an early adopter of CatsMe!, an AI-driven smartphone application that purports to tell when a cat is feeling pain. That cuts down on the guesswork of when it is necessary to embark on a stressful trip to the veterinarian.

“He is at an age where more and more diseases are going to appear,” said Ms. Kitakata, who is single and has a grown son. “So being able to consult the vet but still reduce the number of visits to the hospital is very important for him and for me.”

While pets are an integral part of many families around the world, these companions have an outsized role in Japan due to the ageing population and plummeting birth rate. The Japan Pet Food Association estimated there were almost 16 million pet cats and dogs in the country last year, more than the number of children under 15.

Tech startup Carelogy and researchers at Nihon University developed CatsMe! by training it on 6,000 pictures of cats, and the app has been used by more than 230,000 customers since its launch last year. The developers say it is more than 95% accurate and expect that degree to improve as the AI trains on more feline faces.

Nihon University professor Kazuya Edamura said vets like him can tell to a certain degree whether an animal is in pain or not, but it’s a harder task for owners.

“Our statistics show that more than 70% of elderly cats have arthritis or pain, but only 2% of them actually go to a hospital,” Mr. Edamura said. “So rather than a final diagnosis, we use (the app) as a tool to make owners aware of whether the situation is normal or not.”

Ms. Kitakata and Chi live in a central Tokyo apartment with the perfect feline napping spot near a balcony window which overlooks cherry trees five floors below. She monitors Chi’s toilet activity and uses the app to read its face each day.

Ms. Kitakata had cats since her mid-20s, including Soran, a brown-striped tom who died about six years ago from cancer at just eight years old.

“If I had noticed it, maybe we could have done cancer treatment earlier or something and it would have helped, but even the vet didn’t know,” she said, tears welling in her eyes. “I might have been able to save him.” – Reuters

Fed leaves rates unchanged, sees only one 2024 cut despite inflation progress

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WASHINGTON – The Federal Reserve held interest rates steady on Wednesday and pushed out the start of rate cuts to perhaps as late as December as policymakers sketched out their view of an economy that remains virtually unchanged across its major dimensions for years to come.

With growth and unemployment lodged at levels better than the US central bank considers sustainable in the long run, Fed Chair Jerome Powell said policymakers were content to leave rates where they are until the economy sends a clear signal that something else is needed – through either a more convincing decline in price pressures or a jump in the unemployment rate.

So far, Mr. Powell noted in a press conference after the end of a two-day policy meeting, inflation had fallen without a major blow to the economy, and he said there was no reason to think that can’t go on.

“These dynamics can continue as long as they continue,” Mr. Powell said. “We’ve got a good strong labor market. We think we’ve been making progress toward the price stability goal. We’re asking … is our policy stance about right? And we think yes, it’s about right.”

The result is the Fed accepting a slow expected decline in inflation back towards its 2% target, with the central bank’s preferred inflation measure – the personal consumption expenditures (PCE) price index – virtually unchanged at the end of this year from its current level and the number of rate cuts held to a single quarter-percentage-point reduction.

Those rate reductions are projected to gather pace next year, with Powell deferring on the timing.

“We don’t make decisions about future meetings until we get there,” he said. “Really, it’s going to be not just the inflation readings. It’s going to be the totality of the data, what’s happening in the labor market, what’s happening with the balance of risks, what’s happening with the forecasts, what’s happening with growth. You’re looking at all of that.”

Inflation data published hours before the release of the policy statement and updated projections showed the consumer price index (CPI) rose not at all on a month-to-month basis in May, causing some analysts to argue the latest projections were already “stale.”

Mr. Powell’s characterization of the inflation projections as “kind of conservative” indicated the Fed chief was “keeping the door very much open to a September cut” if inflation continues to weaken, said Krishna Guha, vice chairman of Evercore ISI.

Investors in contracts tied to the Fed‘s benchmark interest rate largely kept bets intact that the central bank would approve quarter-percentage-point reductions in September and December.

Mr. Powell himself said the decision about the rate path was a “close call” for many policymakers, and that to some degree the Fed had merely traded an earlier start to rate reductions this year by tacking an additional anticipated cut onto 2025.

Still, he called the decision to start policy easing “consequential,” and the drop in expectations for this year completes a broad swing in sentiment from just six months ago when policymakers in their December 2023 forecasts envisioned an imminent kickoff to three years of steady rate reductions.

Under the current projections, absent a surprise in upcoming inflation or jobs data, the cuts would likely not begin until December, moving the Fed‘s decision out of the Nov. 5 US presidential election cycle.

 

HIGHER NEUTRAL RATE

The policy statement issued on Wednesday combined an acknowledgement of “modest further progress” on inflation in recent months with a restatement of language that rate reductions won’t be appropriate until officials have “gained greater confidence” that price pressures will continue to ease.

The PCE price index increased at a 2.7% annual rate in April; the median projected by policymakers for the end of the year is 2.6%, with a full return to the 2% target in 2026.

The weak CPI number for May was “only one reading,” Powell said. “When we are (more confident), then we can look at loosening policy.”

The S&P 500 and Nasdaq Composite stock indices closed sharply higher on the day, while the US dollar and yields on US Treasuries fell.

“The market cares more than the economy does about whether there are two cuts this year or only one,” said Brian Jacobsen, chief economist at Annex Wealth Management. “The Fed is basically rearranging the rate-cut deck chairs” from 2024 to 2025.

The new Fed projections show the economy is still expected to grow at a slightly above-trend 2.1% this year despite a sluggish first quarter, and the unemployment rate will remain at its current 4% through the year.

“Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low,” the Fed said in its statement, which was approved unanimously.

Along with trimming the number of rate cuts expected this year, the new rate projections raised the long-run “neutral” rate needed to keep inflation in check while maintaining steady growth to 2.8% from 2.6%.

The long-run rate has now moved up more than a quarter of percentage point over the Fed‘s last two sets of projections, a possible sign officials feel inflation will be harder to tame in the future.

Mr. Powell said the increase in the long-run rate did not necessarily influence officials’ short-run projections for the benchmark interest rate, but noted they were still mulling just how restrictive monetary policy had become.

The Fed raised rates aggressively in 2022 and 2023 to curb inflation that had surged to a 40-year high in the aftermath of the COVID-19 pandemic.

“We’re making policy with the economy that we have, with the distortions that we have,” Mr. Powell said. “The question of how restrictive this policy has become is one that everyone‘s asking … I think the evidence is pretty clear. This policy is restrictive and is having the effect we would hope for.” – Reuters

German government plans supplementary budget for 2024, Bild says

FREEPIK

BERLIN – The German government is planning a supplementary budget for the current year with up to 11 billion euros ($11.89 billion) in additional borrowing while respecting the debt brake, newspaper Bild said on Thursday, citing government sources.

The ministry of finance informed budget politicians of the coalition government about the plans a few days ago, Bild said.

“Something like this is conceivable. But the government has not yet made a concrete decision,” a government source told Reuters.

The structural component of the debt brake, a fiscal rule embedded in the German constitution, allows for a limited deficit spending of 0.35% of gross domestic product. Its cyclical component nevertheless allows additional borrowing in economic downturns.

Additional borrowing would be possible in 2024 because the economy will grow more modestly than previously expected during budget preparations.

“We are monitoring the development of tax revenues and budget implementation and are ready to act at any time,” a spokesperson from the finance ministry told Reuters.

US healthcare spending rises to $4.8 trillion in 2023, outpacing GDP

FREEPIK

WASHINGTON – Healthcare spending in the US is projected to have risen 7.5% in 2023 to $4.8 trillion, federal data showed on Wednesday, outpacing the projected annual gross domestic product growth rate of 6.1%.

Spending on Medicaid and private health insurance drove the growth, with the insured share of the population surging to a historic high of 93%, data from the U.S. Centers for Medicare and Medicaid Services (CMS) showed.

The number of insured individuals largely grew due to record high enrollment in Medicaid, with 91.2 million people being covered under the federal and state health program for the poor in 2023.

Medicare spending is projected to have grown by 8.4% to over 1 trillion and the Medicaid by 5.7% to $852 billion. Spending on private health insurance is projected to have grown by 1.1% to $1.4 trillion.

The estimated healthcare spending per person in the U.S. stood at about $14,423 in 2023 and $15,074 in 2024.

National health spending is expected to grow by 5.2% in 2024, though Medicaid enrollment is set to decline by 11.2% when over 10 million people lose coverage now that pandemic response measures guaranteeing continuous enrollment have expired. An estimated further 2 million will lose coverage in 2025.

Spending is set to grow an average of 5.6% a year between 2023 and 2032, outpacing the projected annual gross domestic product growth rate of 4.3% during the same period.

The rise will lead to an increase in the health spending share of growth domestic product to 19.7% by 2032 from 17.3% in 2022, the data showed.

Spending in the Medicare program for people over the age of 65 and the disabled is set to initially grow during the coming decade partially due to measures in President Joe Biden’s signature Inflation Reduction Act which among other provisions introduced a $2,000 annual cap on out-of-pocket spending.

It will gradually fall over the following years when the effects of other provisions kick in, such as drug prices negotiated by Medicare with pharmaceutical companies that are set to apply starting 2026, and the tying of drug price increases to inflation which already started in 2023. – Reuters

A decade of offering affordable sanctuaries to Filipino families

Two-storey complete finish homes in Santevi by Ovialand. Located at Brgy. San Vicente, San Pablo City, Laguna

Ovialand President and Chief Executive Officer Pammy Olivares-Vital’s journey in real estate began amidst a time of crises. While she initially did not want to get into the family business, her father persuaded her to help out as times were tough. The family had been providing homes via government relocation for the government well before Ovialand came to be, and this is how the family gained a well of experience in the home-building segment.

“That was the start of my career in real estate, or as part of our story. It was not the first and only crisis we experienced,” she recalled in an interview, referring to the 2008 financial crisis and other hardships that shaped her early years in the industry.

Ovialand was the result of her experiences, born out of a desire to be proactive and resilient in an industry that was rapidly changing. “We didn’t give up. What we wanted to do was to be better and prevent all these things by being proactive,” she said.

The proactive approach became a cornerstone of Ovialand’s philosophy. “We realized that even if we were in the affordable housing sector, we had to give our clients the best value for money,” Ms. Olivares-Vital said. This commitment to quality and value has guided the company through external and internal challenges, making it “weatherproof” by putting the homebuyer at the center of its operations.

Part of this is providing the homebuyers all the support they need to successfully complete their homebuying experience. The company’s commitment to customer service is paramount.

“We want to make the transition from renting to homeownership seamless. Our proactive customer service aims to address all concerns within 48 hours,” she explained.

And if this proactive approach to service was a cornerstone for Ovialand, the drive to provide “Premier Family Living” is the core. For Ms. Olivares-Vital, Ovialand’s mission goes far beyond financial success.

“It’s a family business. I can say that I grew up in a happy home. We were seven brothers and sisters. It was not always good times, but our home was a place of safety and security. And now that I am a mom, with my husband and four kids, every time I come home to my house, I always feel a sense of peace and security. And I tell myself, ‘I hope that all our homebuyers have this sense of security.’ Because that’s what all of this means,” she said.

“We like to imagine that the developments we make are like mini-suburbia, where you can let your children play in the street, where you can meet your neighbors. That’s how we embody the ‘Premier Family Living.’ So, it doesn’t stop at buying a house. It’s the lifestyle that you and your family will have after.”

As Ovialand celebrates its 10th anniversary, it stands as a testament to Ms. Olivares-Vital and her team’s resilience, innovation, and commitment to providing premium affordable housing. Under her leadership, Ovialand has navigated numerous crises and emerged stronger, continually redefining the standards in the affordable housing sector.

Through that journey, Ovialand has weathered even more intense storms. The pandemic, a period of global uncertainty, was another pivotal point when the company proved the strength of the company’s purpose.

Throughout the journey, the company met major milestones, such as their partnership with JJ Atencio, a mentor and partner who has been instrumental in Ovialand’s growth. “We have grown almost 10 times since we met JJ,” Ms. Olivares-Vital said.

This growth was further bolstered by the partnership with Japanese firm Takara Leben earlier this year, which came at a critical time when Ovialand had to defer its initial public offering. “It was very good; it was a better alternative. It was what was best for the company,” she said.

Embracing the future

To celebrate its anniversary, the company has reemphasized its focus on nation-building by giving back to its communities through education initiatives and the environment. Part of these initiatives includes supporting the education of children of construction workers who have been with Ovialand throughout the years, donating brand-new classrooms to San Pablo Elementary School in Barangay Soledad in Laguna, as well as planting 10,000 trees across South Luzon and Central Luzon.

“Education and health are crucial needs of society. We want to do our job in making tomorrow better for the future generation,” she said.

This is also a reflection of their overall strategy and approach with regard to the Philippine market. Ms. Olivares-Vital described Ovialand’s market as “educated, hardworking, and aspirational,” acknowledging the evolving expectations of homebuyers and their growing discernment of the real estate industry.

“There’s a misconception that just because it’s affordable, it can be below standard. But Filipinos are smart. They want to be wiser with their investment. They want to make well-thought-of decisions, and they want to plan better for the future,” she noted.

As she looks forward to the future of the country, she hopes that developers take this into consideration and “step up their game.”

“Clients are very discerning. And it will elevate the quality of businesses in the country, not just in terms of our industry but everybody else as well. It will force us to be better at the services that we give, and it will force us to become better employers and to have smarter organizations.”

As Ovialand prepares for the future, its regional growth strategy is set to expand beyond Southern and in Central Luzon with a plan to become a nationwide developer in the next ten years.

Hopefully in that time, Ms. Olivares-Vital noted, at least part of her vision for the company would come true. “I hope that — and I really mean this from the core of my heart — that all our communities would provide an environment for children to thrive,” she shared. “I hope that families will feel secure and happy in their homes — children will be able to play outdoors more, climb trees, make friends, and have lasting friendships in their community.”

“That would be, for me, a testament of a job well done.”

‘FFCCCII Lakad Magkaibigan’ of over 5,000 entrepreneurs in Filipino-Chinese community mark Independence Day

Part of the thousands who joined FFCCCII Lakad Magkaibigan civic walk on June 9 in Manila to celebrate Philippine Independence Day and also Filipino-Chinese Friendship Day

The Federation of Filipino-Chinese Chambers of Commerce and Industry, Inc. (FFCCCII) and other major Filipino-Chinese community associations, such as the Filipino Chinese Amateur Athletic Federation (FCAAF) and others, the Manila City government and the Philippine Sports Commission (PSC) on June 9, Sunday morning, spearheaded a pre-Independence Day civic walk called “FFCCCII Lakakad Magkaibigan,” which started both at Binondo-Intramuros Bridge and Binondo Church in Binondo, Manila and ended at the Bonifacio and Katipunan Revolution Shrine fronting Padre Burgos Avenue, Manila.

There, the diverse groups held a flower offering ceremony, a flag-raising ceremony, and a short program led by FFCCCII President Dr. Cecilio K. Pedro and other community leaders making speeches.

“Our walk today brought together participants from different sectors of the Filipino Chinese community, the major business and civic organizations, barangays, colleges, and schools, and others. This occasion is a shared celebration of our Philippine Independence Day, aimed at expressing our love for our country and fostering patriotism among our citizens,” Dr. Pedro said.

Simultaneously in the morning of June 9, the “FFCCCII Lakad Magkaibigan” civic walks were also conducted in Bacolod City, Cebu, Tacloban, and Palawan.

The event also celebrated the national government’s annual Filipino Chinese Friendship Day” on June 9. It was on this date in 1975 in Beijing when Former President Ferdinand E. Marcos and Chinese Premier Zhou Enlai signed the agreement opening official diplomatic relations between the Philippines and China, ahead of even most Asian countries and even ahead of USA establishing official diplomatic ties with Beijing.

The Filipino-Chinese community is celebrating Philippine Independence Day and committed to help sustainable, inclusive Philippine economic growth. Even during the Spanish colonial era and even without benefit of citizenship, the ethnic minority had strongly supported the anti-colonial struggle for Philippine independence with many ethnic Chinese and part-Chinese who supported the revolution such as the Chinese immigrant who became Philippine Revolution General Jose Ignacio Paua and the businessman Roman Ongpin (jailed by Spanish and American colonizers for pro-independence cause), among others. During World War II, the Filipino-Chinese community actually supported and even had guerrilla forces which resisted the Japanese military invaders.

Dinner reception

Earlier on June 7, Friday night, a dinner reception was attended by over 1,200 business and civic leaders of diverse Filipino-Chinese organizations at the Philippine International Convention Center (PICC). This was another advance celebration of the 126th Philippine Independence Day as a yearly tradition spearheaded by the FFCCCII.

During this reception, the inaugural issue of the new Manila Galleon business magazine was also unveiled and presented to all the entrepreneurs and guests. The Manila Galleon business magazine is envisioned to be an exponent of faster and sustainable Philippine economic growth as well as international cooperation with Asia-Pacific neighbors.

The magazine got its name and inspiration from the fabled and world-famous Manila Galleon trade of 250 years which saw Manila emerge as a vital entrepot between the thriving China intercontinental trade with Latin and Central America, Europe.

Peso slump could derail rate cuts

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By Luisa Maria Jacinta C. Jocson, Reporter

THE PESO WEAKNESS could impact the Bangko Sentral ng Pilipinas’ (BSP) policy easing cycle even after inflation has settled within target for a sixth straight month in May, analysts said.

“The recent weakness of the Philippine peso poses a significant challenge for the central bank as it navigates its monetary policy,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.

In May, the peso sank to the P58-per-dollar level for the first time since November 2022. Since then, the BSP has intervened in “modest” amounts to keep markets orderly.

The peso closed at P58.68 per dollar on Tuesday, strengthening by 11 centavos from its P58.79 finish on Monday.

“From how the (peso) has been performing lately, we think that (peso) movement/performance is what the BSP will prioritize,” Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

GlobalSource country analyst and former BSP deputy governor Diwa C. Guinigundo said that a weak peso may contribute to stronger price pressures. “That should make monetary policy more cautious about an early easing,” he said in a Viber message.

“A depreciating peso could amplify inflationary pressures by increasing the cost of imports, potentially constraining the BSP’s ability to ease policy,” Mr. Roces added.

Headline inflation quickened to 3.9% in May from 3.8% in April but marked the sixth straight month that inflation settled within the BSP’s 2-4% target band.

Inflation averaged 3.5% in the first five months, matching the BSP’s full-year forecast.

If inflation continues to settle within target despite upside risks, Mr. Guinigundo said that the BSP may start cutting rates.

“This confidence should be communicated well and in the proper context of successful inflation management. That should convince the market that BSP is not just being too aggressive but is well grounded in its policy decision to ease. Speculation in the (foreign exchange) market will be minimized, if not totally pacified,” he said.

Mr. Guinigundo said that peso weakness can be minimized if the central bank “will continue to emphasize the encouraging trend of inflation and an ultimate within-target reading of the average inflation by the end of the year.”

BSP Governor Eli M. Remolona, Jr. told Reuters Global Markets Forum on Tuesday that the central bank is less hawkish than before but is still firm on wanting inflation to settle near the middle of the 2-4% target.

He earlier said that the BSP could begin cutting rates as early as August.

Meanwhile, Mr. Roces noted that cutting ahead of the US Federal Reserve may be risky and could also impact the peso.

“Furthermore, lower interest rates ahead of the Fed could narrow the interest rate differential, risking capital outflows and further currency depreciation,” he said.

“This scenario demands a delicate balance: while the BSP has some leeway to support domestic growth through rate cuts, it must carefully manage the consequences on inflation and investor confidence.”

Mr. Remolona has said that while the BSP monitors the Fed’s moves, its own monetary decisions are independent of the US central bank. The BSP also does not need to wait for the Fed to begin its own easing cycle, he said.

Meanwhile, Jonathan L. Ravelas, senior adviser at professional service firm Reyes Tacandong & Co., said that inflation still remains the key indicator to watch before any rate cut.

“We need to see a steady decline in inflation expectations as well as the headline number to see a cut in August. The next two months are critical to see the inflation trend to trend lower,” he said in a Viber message.

The BSP earlier said that inflation could temporarily breach the 2-4% target until July due to base effects.

“The timing and size of the BSP rate cuts will be driven by our gross domestic product’s (GDP) soft patch because of higher real interest rates, and fiscal spending constraints, followed by the US Fed’s timetable,” Mr. Asuncion added.

GDP grew by 5.7% in the first quarter, faster than the 5.5% a quarter earlier but slower than the 6.4% a year ago.

The government is targeting 6-7% growth this year.

POGOs complicate Philippine effort to exit FATF’s ‘gray list’

Several Chinese who illegally worked at a Philippine Offshore Gaming Operator (POGO) were deported by the Philippine government in this photo taken in February. — PHILIPPINE STAR/EDD GUMBAN

By Kyle Aristophere T. Atienza, Reporter

THE STRONG PRESENCE of offshore gambling operators complicates the Philippines’ efforts against dirty money and does not bode well for its ambition to become an investment hub, economists warned.

Money laundering in gaming activities has been a major concern of the Financial Action Task Force (FATF), which has placed Manila under its “gray list” of countries under increased monitoring for dirty money since 2021, said Enrico P. Villanueva, who teaches money and banking at University of the Philippines Los Baños.

“The presence of Philippine Offshore Gaming Operators (POGOs) and their links to crimes undermine the country’s effort to exit from FATF’s gray list,” he said in a Facebook Messenger chat.

POGOs, which cater to customers in China and other countries, have been a major headache for authorities in recent months, with policy makers flagging national security risks and linking them to transnational crimes.

Congress under former President Rodrigo R. Duterte passed a law taxing POGOs in a bid to legalize them, despite mounting concerns on their social costs. Chinese President Xi Jinping himself had asked the former Philippine leader to not just regulate but ban the online gambling business.

“There are 402 canceled POGOs and we are looking at 58 that are subjects of interest given that they are still operating,” Presidential Anti-Organized Crime Commission (PAOCC) spokesperson Winston John Casio said in a Viber message.

The Philippine economy is still immature in terms of legal and social frameworks, making it unprepared for a gaming sector that is, to begin with, illegal in other countries, said John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc.

“The economy has yet to mature to be able to operate POGOs according to legal, economic, social frameworks,” he said via Messenger chat. “The current form of POGOs in the country are a red flag on the integrity of money circulating in the economy.”

The Philippines was re-included in the gray list in June 2021 and could be added to the FATF’s blacklist due to increasing risk of money laundering from casinos and lack of prosecution for terrorism financing cases, among other reasons.

WEAK REGULATIONS
Diwa C. Guinigundo, a former central bank deputy governor, said domestic regulations over POGOs are weak, and it does not help that institutions are prone to corruption.

“The financial operations of POGOs are opaque and therefore open to money laundering,” he said in a Viber message.

“I don’t think FATF would look kindly to the Philippines in the presence of these operations which may likely be associated with dirty money.”

Anti-Money Laundering Council Executive Director Matthew David in January noted that the “most challenging action item” for them was the prosecution of terrorism funding cases. “We need to file more terrorism financing cases,” he said at a Palace briefing.

Chester B. Cabalza, who teaches at the National Defense College of the Philippines, said via Messenger chat that proceeds from POGOs are at high risk of being used for financing criminal activities. “They are harbingers for criminal activities.”

The Philippines hosts over 300 illegal POGO hubs, according to the PAOCC, which in recent weeks raided several sites in Central Luzon.

PAOCC and the Criminal Investigation and Detection Group were able to rescue over 100 foreign nationals, including 126 Chinese and 23 Vietnamese, in a June 4 raid of Lucky South 99 Outsourcing, Inc., a POGO complex in Porac, Pampanga described by authorities as the biggest business facility in the province with 46 buildings such as villas and a golf course.

PAOCC’s Mr. Casio, speaking to BusinessWorld in a phone call, said Lucky South “had a provisional license up until September 2023,” which was canceled “around the same time.”

“Then they submitted a letter request to the Philippine Amusement and Gaming Corp. (PAGCOR), but on May 22, 2024, it was denied with finality by PAGCOR.”

DAMAGE TO REPUTATION
Mr. Villanueva said POGOs threaten the Philippine government’s goal of making the country an investment hub in the region.

“There may be sovereign or private entities who are particularly sensitive to money laundering and gaming, so this group may shun the Philippines as an investment destination if their concerns are not addressed,” he said.

The government should continue to press the gaming sector for “acceptable ways of preventing money laundering,” he added. “Banks on the other hand have to be more vigilant in onboarding clients from the gaming sector and in monitoring flows from this sector.”

Mr. Guinugundo said: “If all that we could show to the world is our increasing dependence on these gambling operations for public revenues, I don’t think that reputation could inspire confidence in the long-term viability of investments in this country.”

PAGCOR said on Wednesday the proposal to ban POGOs might force them to go underground and would be harder to regulate.

“If this happens, it would become harder for us to monitor them, and the number of illegal operators would grow and pose a bigger headache to our law enforcement authorities,” PAGCOR Chairman and Chief Executive Officer Alejandro H. Tengco was quoted as saying in a statement.

“Once they are underground, we lose control over them.”

A ban on POGOs, also called Internet Gaming Licensees (IGLs), does not assure that its operations will stop and face legal consequences, Mr. Tengco said.

“On top of these, the government will lose potential revenues of more than P20 billion annually, without any guarantee that illegal activities will stop,” he added.

If outlawed, POGOs could also be free to engage in illegal activities like scamming, hacking and other cybercrimes, posing threats to the country’s security, the PAGCOR chairman said.

“However, for us, the real problem are the criminal syndicates masquerading as POGOs.”

Albay Rep. Jose Ma. Clemente S. Salceda, who heads the House Ways and Means Committee, said banning POGOs could push them to proceed with illegal operations.

“It will kill any inducement to good behavior in that sector. It will also completely wipe out the incentive for legally compliant licensees to tip off illegal operations of noncompliant competitors,” he said in a Viber chat message. — with Beatriz Marie D. Cruz

Marcos says inflation is still Philippines’ ‘greatest problem’

PRESIDENT FERDINAND R. MARCOS, JR. — PHILIPPINE STAR/KJ ROSALES

PHILIPPINE PRESIDENT Ferdinand R. Marcos, Jr. on Wednesday said inflation remains a major concern for his government.

“It remains unfortunately our greatest problem that is brought by forces that we cannot control,” Mr. Marcos said at an annual Independence Day reception for diplomats at the Presidential Palace.

Headline inflation hit a six-month high of 3.9% in May amid rising utility and transport costs alongside increasing food prices. It was higher than April’s 3.8% but slower than 6.1% in the same month last year.

This brought the five-month average inflation to 3.5%, within the Bangko Sentral ng Pilipinas’ 2-4% target range.

“Despite the woes brought about by global inflation, the Philippines has still managed to curb inflation to a reasonable, almost manageable level,” Mr. Marcos said.

The Philippines is still reeling from the El Niño weather phenomenon, which has caused P9.89 billion in agricultural losses as of this week.

Inflation remained manageable due to the combined effects of the fiscal and monetary policies,” said John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc. 

“Prudence in policy making also helped in tempering a threat to macroeconomic stability,” he said in a Facebook Messenger chat.

The Monetary Board has kept the policy rate steady at a 17-year high of 6.5% since October 2023 to tame inflation.

Mr. Marcos also on Wednesday emphasized the Philippines has continued to enjoy a “favorable” credit rating.

“We are credited with a ‘stable’ outlook, which signals growth momentum in the medium term,” he said, hoping that it would translate to more accessible financing for government programs.

Fitch Ratings has kept the Philippines’ “BBB” credit rating with a “stable” outlook. A “BBB” rating indicates low default risk and reflects the economy’s adequate capacity to pay debt. Meanwhile, a “stable” outlook means it is likely to be maintained rather than lowered or upgraded over the next 18-24 months.

“So, we will maintain that status and we will try to improve that and across all major regional and international debt [rating] agencies,” Mr. Marcos said.

The government is targeting to achieve an “A” level rating by 2028 or the end of the Marcos administration. — Kyle Aristophere T. Atienza

World Bank says global growth stabilizing but below pre-COVID levels

The sunset is seen from Paranaque City, March 7. The World Bank projects Philippine economic growth to average 5.8% in this year. — PHILIPPINE STAR/RUSSELL PALMA

WASHINGTON — The World Bank on Tuesday said the US economy’s stronger-than-expected performance has prompted it to lift its 2024 global growth outlook slightly but warned that overall output would remain well below pre-pandemic levels through 2026.

The World Bank said in its latest Global Economic Prospects report that the global economy would avoid a third consecutive drop in real GDP growth since a major post-pandemic jump in 2021, with 2024 growth stabilizing at 2.6%, unchanged from 2023.

That’s up 0.2 percentage point from the World Bank’s January forecast, largely on the strength of US demand.

“In a sense, we see the runway for a soft landing,” World Bank Deputy Chief Economist Ayhan Kose told Reuters in an interview, noting that sharply higher interest rates have brought down inflation without major job losses and other disruptions in the US or other major economies.

“That’s the good news. What is not good news is that we may be stuck in the slow lane,” Mr. Kose added.

The World Bank forecast global growth of 2.7% in both 2025 and 2026, a level well below the 3.1% global average in the decade prior to COVID-19. It also is forecasting that interest rates in the next three years will remain double their 2000-2019 average, keeping a brake on growth and adding debt pressure to emerging market countries that have borrowed in dollars.

Countries representing 80% of the world’s population and GDP output will see weaker growth through 2026 than they had prior to the pandemic, the report said.

“Prospects for the world’s poorest economies are even more worrisome. They face punishing levels of debt service, constricting trade possibilities and costly climate events,” said World Bank Chief Economist Indermit Gill, adding that those countries will continue to require international assistance to fund their needs.

The report contains an alternative “higher-for-longer” interest rate scenario, in which persistent inflation in advanced economies keeps interest rates about 40 basis points above the lender’s baseline forecast, cutting 2025 global growth to 2.4%.

US BUOYANT
Strong demand and higher inflation readings in the US have delayed expectations for Federal Reserve rate cuts, and the US economy is defying predictions of a downturn for the second year in a row, according to the report. The World Bank is now forecasting 2.5% US growth for 2024 — matching the 2023 pace — and up sharply from the January forecast of 1.6%.

Mr. Kose said the US upgrade accounts for about 80% of the added global growth since the January forecast.

The World Bank also upgraded China’s 2024 growth forecast to 4.8% from 4.5% in January, largely on the back of increased exports that have offset soft domestic demand. But it forecast China’s growth will fall to 4.1% in 2025 amid weak investment and consumer confidence and an ongoing property sector downturn.

The World Bank retained its growth forecast for the East Asia and the Pacific region excluding China at 4.6% this year.

“Over the forecast horizon, GDP growth in most East Asia and the Pacific economies except China — including Indonesia, Malaysia, and the Philippines — will be anchored by solid growth of private consumption supported by low inflation, declining borrowing costs, and firm labor market conditions,” it said.

The World Bank projects Philippine GDP growth to average 5.8% in this year and 5.9% both in 2025 and 2026.

“Heightened uncertainty, related in some cases to recent political transitions and conflict, and including about global trade policies, is expected to dampen private investment,” it said.

“In tandem, rising public debt—which exceeds pre-pandemic levels in most countries in the region— and budget approval delays are anticipated to constrain public investment growth in some economies.”

CONFLICT RISKS
In addition to the higher-for-longer rate scenario, the World Bank said the biggest downside risks to the global outlook included greater spillovers from armed conflicts in Gaza and Ukraine.

A wider war in the Middle East could cause further disruptions to shipping and push up oil prices and inflation. Likewise, more uncertainty about the path of Russia’s invasion in Ukraine could also disrupt markets for oil and grains, while choking investment into neighboring countries, the bank said.

Increasing trade restrictions driven by geopolitical rivalries also could hamper the recovery of global trade volume growth, which was barely perceptible last year at about 0.1%. The World Bank forecast a rebound to 2.5% in 2024, up from 2.3% in the January forecast.

But it said rising protectionism and industrial policies in many countries could lead to more inefficiencies in global supply chains and reduce investment into emerging markets and developing countries.

The World Bank also said a deeper downturn in China, the world’s second-largest economy, would hamper growth, especially in commodity exporters and trade-intensive economies.

On the upside, the World Bank said that the US could continue to surpass expectations, boosting global growth with lower inflation if elevated productivity and labor supply due to immigration prove persistent. Lower inflation globally, supported by productivity gains, improved supply chains and easing commodity prices, could prompt central banks to cut interest rates more quickly than now expected, boosting credit growth, the bank added. — Reuters with inputs from BMDC

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