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PHL negotiator says GSP+ expiry hanging over EU free trade

REUTERS

By Justine Irish D. Tabile, Reporter

A FREE trade agreement (FTA) with the European Union (EU) needs to be concluded by the time the Philippines’ current market access arrangements expire, the government’s chief trade negotiator said.

Trade Undersecretary Allan B. Gepty told reporters that the EU’s Generalised Scheme of Preferences Plus (GSP+) scheme currently gives Philippine products preferential access to the EU.

GSP+ comprises a set of trade concessions granted by Europe to developing countries that meet its criteria for human rights, labor rights, sustainable fishing, and other international norms.

“While it has been extended up to December 2027 and we are waiting for the new GSP scheme, the fact remains that the Philippines will reach the threshold of upper middle-income status and will no longer be qualified as a beneficiary of the EU GSP+,” he said.

“(That) means that we have to really fast track the FTA negotiations so that, in terms of trade, particularly exports, there will be no disruptions to our stakeholders or exporters because we want to maintain, at the very least, the same level of preferential arrangement,” he added.

The Philippines currently participates in the EU’s special incentive arrangement for low and lower middle-income economies, in which zero duties are collected on 6,274 Philippine-made products.

Meanwhile, the Philippines and the EU announced in the first quarter the formal resumption of the negotiations for an FTA, which were halted in 2017 due to the EU’s concern over the policies of the Duterte administration.

The FTA is expected to increase bilateral trade by 6 billion euros and help attract more European investment to the Philippines, Mr. Gepty said.

“In terms of investment, this is what the European investors are looking for and also, I would say, anticipating because they want a more stable and predictable business environment,” he said.

“This can be done when (the Philippines) commits to rules and disciplines in the process of investment, services, sustainable development, competition, and intellectual property, among others,” he added.

Chris Humphrey, executive director of the EU-ASEAN Business Council, told BusinessWorld that the Philippines may lose its GSP+ privileges for no other reason than the country’s own economic development.

“The thing with the GSP+ is that it is time-limited, and a lot of it is tied to your own economic development. And with the Philippine economy growing quite rapidly, at some point in the not too distant future, you will lose GSP+ privileges in any case,” Mr. Humphrey said.

“It’s just a question of when, not a question of if. And the FTA will mean that you maintain that preferential access to the European market; therefore, it’s very important for the Philippines,” he said.

However, he said that the Philippines and the EU should work together to make sure that the FTA is properly utilized.

“This is a problem with many trade arrangements. And the problem really lies in businesses not understanding the preferences that are available to them,” he said.

“Unfortunately, for many trade deals, businesses don’t always know about them or don’t know how to utilize them. So we need a lot more communication around that; it’s a job for governments, and it’s also a job for business associations like ourselves to alert people of it,” he added.

Meanwhile, Mr. Gepty said that the government has conducted trade policy dialogues with stakeholders and plans to raise rules of origin issues in the negotiations, which have been a concern for exporters.

“In every negotiation, as much as possible, if it is in your interest, you really have to negotiate for the most liberal rules of origin,” he added.

Mr. Humphrey said a resolution will depend on how the negotiations go, as preferential trade access to any market requires countries to meet specific rules of origin requirements.

“Now, often in trade agreements, the rules of origin will say that a certain percentage of the value of the goods needs to be originating in the Philippines before it goes to the EU,” he said.

“So the question is, how much can they (the Philippine negotiators) drive that percentage figure down, and what are the requirements then to prove that value? So it will come down to the details of the negotiation in that case,” he added.

According to Mr. Gepty, the formal negotiations are expected to start by October, while initial meetings at the chief negotiator level have started.

The Philippine Statistics Authority reported that total trade between the EU and the Philippines was $16.17 billion in 2023. Preliminary data from the Bangko Sentral ng Pilipinas indicate that total foreign direct investment from the EU last year amounted to $63.99 billion.

Tobacco farmers press for signing of ‘economic sabotage’ bill before SONA

BW FILE PHOTO

TOBACCO growers expressed support for the Anti-Agricultural Economic Sabotage Act, citing the need to address unfair competition from smuggled tobacco products, and asked the President to sign the measure before he addresses Congress in July.

“We believe the bill will help prevent the smuggling of agricultural products and will deter these criminals,” Bernard R. Vicente, chairman of the National Federation of Tobacco Farmers Association and Cooperatives (NAFTAC), said in a statement.

The House of Representatives passed House Bill No. 9284, also known as the “Anti Agri-Fishery Commodities and Tobacco Economic Sabotage Act” on Sept. 27, 2023. The Senate also approved a similar measure on Dec. 11.

Philippine Tobacco Growers Association (PTGA) President Saturnino Distor said that tobacco farming is vital to food security since their members also farm rice, corn, and other primary crops.

“The bill is urgently needed since the agricultural sector is reeling from rampant smuggling that threatens farmers and millions of their dependents,” he added.

According to the National Tobacco Administration, there are currently 2.2 million people financially dependent on tobacco including more than 430,000 farmers, farm workers and their family members.

“We hope that Congress can finally have a Bicameral Conference Committee so it can be signed by President Marcos before his (State of the Nation Address). This is one of the priorities of his administration and a big help to us farmers,” Mr. Distor said.

The President’s home region of Ilocos is a major producer of tobacco.

The Samahang Industriya ng Agrikultura estimates that the government loses at least P200 billion in revenue annually due to smuggling. 

Smuggled cigarettes are estimated to deny the government at least P30 billion annually in excise taxes.

The Bureau of Internal Revenue reported a 16% decline to P135 billion in excise tax collections in 2023. This was attributed to an increase in the smuggling and distribution of illegal cigarettes and vape products.

The PTGA and NAFTAC have called for more comprehensive government monitoring of illegal vape products, citing the threat to tobacco farmers’ livelihoods. — Adrian H. Halili

Well-milled rice prices average P56.98 per kilo at mid-April

Workers load sacks of flour in a delivery truck in Manila, July 11, 2022. — PHILIPPINE STAR/ MIGUEL DE GUZMAN

THE national average retail price of well-milled rice at mid-April was P56.98 per kilogram (kg), according to the Philippine Statistics Authority (PSA).

Rice prices at mid-April dropped from P57.04 per kg during the April 1-5 period, which the PSA calls the first phase of the month. The second phase is April 15-17.

The highest retail price at mid-April was reported in Central Luzon, where the staple averaged P58.90 per kg during the period.

The lowest average rice price was in the Ilocos Region at P54.34 per kg.

The PSA reported that regular-milled rice averaged P51.41 per kg, against P51.38 during the first phase.

The highest price for regular-milled rice was P54.23 per kg recorded in the Central Visayas, while the Western Visayas posted the lowest price at P46.69 per kg.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. has said that the retail price of rice is expected to remain elevated until midyear due to the impact of El Niño.

The PSA said that galunggong (round scad) prices averaged P196.29 per kg at retail in mid-April, against the P204.49 posted during the first phase.

The average refined sugar price rose to P87.48 per kg during the period, while brown sugar prices fell to P76.35 per kg.

Tomato sold at retail averaged P68.52 per kg during the period, against P72.01 reported in the first phase of April. — Adrian H. Halili

ADB sees ‘huge demographic shift’ by 2050 as Asian populations age

PHILIPPINE STAR/MIGUEL DE GUZMAN

ASIA-PACIFIC countries with younger populations like the Philippines are projected to experience rapid demographic changes by 2050 amid declining fertility and longer lifespans, the Asian Development Bank (ADB) said. 

“Asia and the Pacific’s rapid development is a success story, but it’s also fueling a huge demographic shift, and the pressure is rising,” ADB Chief Economist Albert F. Park said in a statement.  

In developing Asia, individuals aged 60 and above are expected to double to 1.2 billion by 2050, noting that regional economies with younger populations are expected to experience “dramatic shifts” in its population age structure.

“In Cambodia, the Philippines, and Uzbekistan, fertility rates are currently high at 2.3–2.8 live births per woman, but will fall by 2050,” the ADB said in its “Aging Well in Asia” report.

Citing its Asian Development Review, the ADB said the young population’s contribution to Philippine growth is projected to slow to 0.231 percentage points (ppts) between 2031 and 2040, from 0.481 ppts during the 2021-2030 period.

That growth rate would put the Philippines behind Pakistan (0.538), Malaysia (0.284), Vietnam (0.282), and ahead of India (0.219), Indonesia (0.170), Hong Kong (0.066) and Singapore (0.046).

Between 2021 and 2030, young Filipinos’ economic contribution are expected to outperform the rest of developing Asia.

Older people in the Philippines, Thailand, and Vietnam who are living alone have increased by 40-90% in the last two decades, the ADB said.

“The conventional wisdom that the demographic tailwinds that helped propel developing Asia’s past economic growth will turn into demographic headwinds in the coming decades,” according to the report.

The ADB called on the need to prioritize older Asians’ health to increase their capacity to work and contribute to economic growth.

In developing Asia, the Philippines ranked third highest (37.7%) in terms of having older people with unmet healthcare needs, behind Indonesia (43.7%), Bangladesh (43.5%).

Around 40% of older people in the poorest quintile also reported that they did not use healthcare in the past year. Only 19% of older Filipinos said their health was excellent. — Beatriz Marie D. Cruz

New MSME dev’t plan calls for more funding, tech assistance

A vendor sits in a stall selling products in sachet packaging at a public market in Manila, Philippines, Aug. 1, 2019. — REUTERS

A NEW national strategy for small businesses is expected to help reduce their operating costs and make them more globally competitive, the Department of Trade and Industry (DTI) said.

The Micro, Small and Medium Enterprise (MSME) Development Plan 2023-2028 had been presented at a meeting in Malacañang last month.

The plan focuses on the integration of digital solutions into economic support for the sector, which will help new businesses comply and remain competitive as technology evolves.

“The new MSME Development Plan is more than a policy document; it is a blueprint for the future, ensuring that our enterprises are competitive, innovative, and resilient,” Trade Secretary Alfredo E. Pascual said.

“By focusing on digitalization, we are preparing our MSMEs to meet the challenges of the modern economy and ensuring they continue to be a critical driver of our nation’s growth,” he added.

In particular, the DTI said it was instructed by President Ferdinand R. Marcos, Jr. to embed artificial intelligence and other digital technologies in the MSME strategy to ensure ease of doing business.

Aside from digital solutions, the new strategy also outlined the institutionalization of shared services facilities and the creation of business-starter support programs.

“These initiatives are designed to reduce operational costs and eliminate barriers for new entrepreneurs, respectively,” the DTI said.

The DTI said that the strategy also targets expediting the loan approval process for MSMEs through the use of machine learning-based credit scoring models. — Justine Irish D. Tabile

Compliance change on invoicing under EoPT

The heat of the dry season is still at its peak. At times like these, many travelers who enjoy the sun are basking in the various destinations and attractions of the archipelago. This reminds me of a family trip to an oceanarium on a sunny day. In the queue with hundreds of tourists to pay the entrance fee, I noticed that the crew was hindered by the task of preparing BIR-registered official receipt.

The use of pre-printed forms as official receipts is still widely practiced as this option is the easiest to obtain permits for. But with the passage of the Ease of Paying Taxes (EoPT) Act, the invoice has taken its place as the principal document to support the sale of both goods and services. Taxpayers, particularly those whose activities are service-oriented, would have to adapt to these changes and find the most effective way of invoicing customers.

In this regard, Revenue Regulations (RR) No. 7-2024 — the rules implementing the invoicing requirements of the EoPT Act which took effect on April 27, provide the following guidelines:

First, all taxpayers using manual official receipts (ORs) should start issuing valid invoices by April 27. The existing ORs may be used as a supplementary receipt provided that ORs are stamped with the words “THIS DOCUMENT IS NOT VALID CLAIM OF INPUT TAX” upon the effectivity of the EOPT Act.

Alternatively, taxpayers that have unused and unissued ORs may opt to convert these to invoices by striking out the word “Official Receipt” in the OR and stamping it with “Invoice”, “Cash Invoice”, “Charge Invoice” “Credit Invoice”, “Billing Invoice”, “Service Invoice” or any name describing the transaction. The converted ORs can be issued as a primary invoice until Dec. 31, and thereafter may be used only as supplementary receipts. This does not require prior approval from the BIR, but there is a need to report the inventory of the unused receipts to the BIR within 30 days of the effectivity of the regulations, or until May 26.

Second, taxpayers using BIR-registered Cash Register Machines (CRM), Point of Sale Machines (PoS), e-receipting or e-invoicing software are allowed to change the words “Official Receipt” to “Invoice” or any name describing the transaction without the need to notify the BIR. This change is considered a minor system enhancement; thus, it does not require the reaccreditation of sales software nor reissuance of the Permit to Use. However, a notice indicating the starting serial number of the converted invoice has to be submitted to the BIR office where the machines are registered.

As this change is expected to be minor, it can be implemented immediately. Documents issued by CRM, PoS and e-receipting or electronic invoicing software containing the word “Official Receipt” beginning April 27 are not considered valid.

Third, unlike the conversion of ORs to Invoices in the BIR-registered CRM, PoS and e-receipting or electronic invoicing software, which is a minor system enhancement, the changes to be introduced in the Computerized Accounting System (CAS) or Computerized Books of Account (CBA) require a major enhancement and update of registration following the existing policies and procedures of filing a new application.

In order to provide ample time in reconfiguring machines and systems, adjustments should be undertaken on or before June 30; any extension requires an approval not to exceed six months from the effectivity of the regulations, or until Oct. 27.

Do note that the issuance of an invoice is required upon collection of receivables arising from services on account that are rendered prior to the effectivity of the regulations. So, in addition to the billing documents issued before April 27, an Invoice must be issued upon receipt of payments from the said receivables.

To summarize the timelines:

1. Taxpayers using manual official receipts are required to use or issue invoices by April 27;

2. Taxpayers using CRM, PoS, e-receipting and e-invoicing software are required to issue an “Invoice” starting April 27 since the “Official Receipts” issued by these machines or softwares shall no longer be considered valid; and

3. Taxpayers using CAS or CBA have until June 30, which is extendible to Oct. 27, to reconfigure or adjust their systems to comply with the requirement.

RR 7-2024 appears to have shortened the period provided under the EoPT Act for taxpayers to comply with the changes introduced by the law. The transitory provisions of the EoPT Act provide taxpayers six months from the effectivity of the implementing rules or until Oct. 27 to comply with the amendments of the Tax Code, which covers the invoicing requirements.

Notably, RR 7-2024 states that the use of “Official Receipts” for the sale of goods or services after June 30 will not be considered evidence of sale of goods or services and equivalent to failure to issue an invoice. The regulations also declare that the ORs issued from CRM/POS beginning April 27 are not considered valid support for input tax claims by the purchaser. This is tantamount to penalizing the purchaser for the compliance faults of the seller.

While the EoPT Act penalizes the seller for failure to comply with invoicing requirements, it is lenient on buyers as to claiming input taxes in relation to some missing details in the invoices. It may be reasonable to adopt the same principle or leniency to the purchasers during the invoicing transition. After all, the buyers have no control over the compliance of the sellers.

I hope the BIR will revisit these points to align with the EoPT Act.

Clearly, businesses are currently experiencing the effect of compliance change brought about by the EoPT Act. As this is meant to provide ease or relief to taxpayers, one hopes that this would be easy and smooth and not as aggravating the effects of climate change.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

 

Delila Dayag is an assistant manager at the Tax Services department of Isla Lipana & Co., the Philippine member firm of PricewaterhouseCoopers global network.

delila.l.dayag@pwc.com

Wild chase for the six remaining berths in Philippine Cup playoffs

Games Friday
(PhilSports Arena)
4:30 p.m. — Magnolia vs Terrafirma
7:30 p.m. — NLEX vs Rain or Shine

DESPITE recent struggles or even an embarrassing game last time out, the dreams of four aspirants in the tight race for the PBA Philippine Cup playoffs are within reach.

And all NLEX (5-4), Magnolia (5-4), Rain or Shine or ROS (5-5) and Terrafirma (5-5) have to do is look ahead and make the most of their chance to collar the two quarterfinals tickets up for grabs in today’s double-header at the PhilSports Arena.

It’s the Hotshots and the Dyip racing for the clinching sixth win at 4:30 p.m. and the Road Warriors and the Elasto Painters battling for the same at 7:30 p.m.

With three playdates left in the eliminations, only sweep-seeking and twice-to-beat San Miguel Beer (10-0) and second-running Barangay Ginebra (7-3) are safely positioned the next round, leaving the four, plus TNT (5-5), Meralco (5-5) and NorthPort (5-6) in a wild chase for the six remaining berths.

Winners of the Friday scorcher take their places in the Last-8 while avoiding complications or worse, going through a sudden death for the final seat in case of a logjam at the end of the preliminaries on Sunday.

If successful in coming out of a three-game slide at the expense of ROS and going 6-4 tonight, the Road Warriors can even contend for No. 2 seeding and win-once incentive. This Frankie Lim’s charges can achieve if they follow through with victory No. 7 against the Gin Kings on Sunday.

The Elasto Painters, who have charged back from a 0-4 start to give themselves a shot at the quarters, are eager to progress on second try after getting stalled by a 102-108 defeat to Magnolia last April 20.

Meanwhile, the Hotshots are bent on rising from back-to-back losses, most especially a 51-74 beatdown from Meralco last Sunday in their lowest scoring output in franchise history.

Odds heavily favor Chito Victolero’s forces in this matchup, though, as they have beaten the Dyip in their last 16 faceoffs over the last six seasons.

But John Cardel and his crew are intent on stopping this trend and not wasting the opportunity they created when they moved to the threshold of the quarters via a 110-108 squeaker over the Batang Pier last week. — Olmin Leyba

DLSU to play in World University Basketball Series

DLSU GREEN ARCHERS — UAAP MEDIA BUREAU

REIGNING UAAP champion De La Salle University braces for a tough competition in Tokyo, Japan when it represents the country in the prestigious World University Basketball Series (WUBS) on Aug. 10 to 12.

This will be the third straight international training camp of the Green Archers in Japan but with a bigger stake of bringing back the world title to the Philippines.

“We’re excited. We trained in Nagoya for the last two years. We know it will be a lot tougher in Tokyo,” said De La Salle deputy coach Gian Nazario after the team barged into its third straight finals appearance in the PBA D-League Aspirant’s Cup.

Ateneo de Manila University was the first Philippine university to play in the WUBS, winning the inaugural title in 2022 before finishing fourth last year.

The redemption for the Filipinos is now on the arrows of the Green Archers, who will field a full line-up led by reigning UAAP MVP and Finals Most Valuable Player Kevin Quiambao.

“It’s part of our preparations for the UAAP moving ahead. …the learnings will be significant going to the UAAP season,” added Mr. Nazario, tasked by coach Robinson to handle De La Salle’s D-League campaign.

Standing in De La Salle’s way in Tokyo are bets from host Japan, South Korea, Indonesia and Taiwan led by WUBS champion National Chengchi University.

But first things first for the Green Archers as they’re out to refine their bearings in multiple summer league campaigns like the Pinoy Liga Collegiate Cup, Filoil Pre-Season Cup and the D-League, where they will face either Marinerong Pilipino-San Beda or Centro Escolar University for the championship.

Prized recruits Jacob Cortez, Kean Baclaan and Luis Pablo are also joining La Salle’s pre-season campaigns in the middle of their residency before being eligible next season but it’s still uncertain whether they’ll be on the roster for the WUBS in Japan.

Only 15 players are required for each roster in Tokyo. — John Bryan Ulanday

Fuellkrug impresses in 1-0 Dortmund victory over PSG in first leg

DORTMUND, Germany — Borussia Dortmund’s Niclas Fuellkrug fired in a first-half goal to seal a 1-0 victory over visitors Paris St Germain (PSG) in a compelling Champions League semifinal first leg on Wednesday.

Nico Schlotterbeck floated a pass into Mr. Fuellkrug’s path and the Germany forward controlled the ball with a perfect first touch before drilling a low shot past keeper Gianluigi Donnarumma in the 36th minute.

PSG, fresh from being crowned Ligue 1 champions and desperate to win their first ever Champions League trophy, found it hard going against a disciplined German defense, especially in the first half with forward Kylian Mbappé largely neutralized.

With the return leg in Paris next Tuesday, the winners of the tie will face either Bayern Munich or Real Madrid, who drew 2-2 in their first leg in Germany, in the final at Wembley on June 1.

The win also confirmed Germany will get a fifth qualifying spot for next season’s Champions League, with Dortmund being the main beneficiaries at the moment, sitting in fifth place in the Bundesliga with three games left to play.

Dortmund went close just before halftime with Marcel Sabitzer but his shot was blocked by Donnaruma.

The French side improved after the break and went agonizingly close to an equalizer in the 52nd minute with Mbappé curling a shot onto the far post and then Achraf Hakimi also hitting the woodwork on the rebound.

Four minutes later Fabian Ruiz saw his stooping header sail wide after being left completely unmarked in the box before Dortmund keeper Gregor Kobel kept out Ousmane Dembele’s close range effort in the 71st.

Dortmund, winners in 1997 and looking to reach their first final since 2013, soaked up the pressure as PSG’s Vitinha narrowly missed the target 10 minutes later. — Reuters

Lakers’ attention

In the wake of the Lakers’ unceremonious exit from the 2024 Playoffs, avid followers of the pro hoops scene have naturally shifted their attention to LeBron James and his plans for the future. As he has been wont to do whenever a fork on his career path looms, he takes his time to survey the landscape and weigh his alternatives. In this particular offseason, the date of reckoning is June 29, the deadline for him to either exercise the player option on his contract or enter free agency.

To be sure, signs point to James retaining his purple-and-gold jersey. The Lakers certainly want him to stay, and, in keeping with tradition, are prepared to give him the maximum allowable salary and benefits under the National Basketball Association’s current collective bargaining agreement. Up in the air, however, is whether shares their sentiment; while he had previously indicated his preference to keep the same address, he chose to provide no definitive answers when he met with media in the wake of their first-round defeat at the hands of the vaunted Nuggets.

Considering James’ continued desire to pursue titles, there is cause to contend that he is simply keeping the Lakers on their toes by refusing to make an early commitment. Although he has acknowledged that injuries to key personnel handicapped their immediate past campaign, he nonetheless believes that the front office should continue to keep an eye on improving the roster. Which is to argue that no one outside of him and fellow All-Star Anthony Davis is indispensable. He is invariably enamored with star power, and with reason. That said, not all that glitters is gold — with Russell Westbrook as Exhibit A.

The bottom line, of course, is that James commands the Lakers’ attention because he deserves it. He may be pushing 40, but he’s still among the best of the best in the league. And because he’s not, in his words, “a participation guy,” the pressure is on ownership to go all in for his services to be secured. There is ample risk attached to accession, the danger of the future being mortgaged for an uncertain present included. Then again, he’s worth it — on the court and off. So, yes, they’ll pull out all the stops for him, and then cross their fingers the moves will redound to their benefit in the final analysis.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and human resources management, corporate communications, and business development.

Filipino hip-hop icon Flow G joins Puregold new collab

Set to join the Tindahan ni Aling Puring lineup is rising hip-hop icon, the talented Flow G.

As the country’s most in-demand artists excitedly gear up to sport Puregold’s signature green and gold colors, the brand is prepping yet another high-profile talent for their much-awaited campaign. Set to join the Tindahan ni Aling Puring lineup is rising hip-hop icon Flow G, who recently released a teaser on the collaboration through an Instagram post of him recording in the studio with a Puregold bag in plain sight.

The rapper joins an impressive posse of musical talents led by alternative pop band SunKissed Lola and the nation’s girl group BINI. While the tripartite pact of BINI, SunKissed Lola, and Flow G might seem quirky, it only highlights Puregold’s intent to promote Filipino musicians of different genres.

Flow G, whose real name is Archie dela Cruz, is often credited for ushering in a new era in Pinoy hip-hop and OPM. Aware of the status and responsibility that come with it, Flow G now seeks to join Puregold in boosting appreciation for Pinoy music and telling the kind of stories that resonate with Filipinos.

It’s been a wild journey for Flow G from the time the rapper gained popularity in the mid-2010s. After getting his career off the ground, Flow G dealt with various speed bumps that included detractors, diss tracks, and the challenges that come with making a name outside their collective. Undaunted, Flow G and his hit songs like “RAPSTAR” and “High Score” powered on and has since realized success. Flow G now aspires to use this collaboration with Puregold and share his panalo story of moving forward with, and pushing for, one’s passion.

Stay tuned as fans of Flow G, BINI, SunKissed Lola, and OPM are enjoined to watch for the sonic adventure that Puregold and its collaborators are ready to bring.

Subscribe now to Puregold Channel on YouTube, like @puregold.shopping on Facebook, follow @puregold_ph on Instagram and Twitter, and @puregoldph on TikTok for more updates.

 

Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by publishing their stories on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.

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OECD upgrades global growth outlook as US outperforms

People walk outside the Bank of England in the City of London financial district in London, Britain, May 11, 2023. — REUTERS

PARIS — The global economy is growing faster than expected only a few months ago thanks to resilient US activity while inflation is converging more quickly than expected with central banks’ targets, the Organization for Economic Cooperation and Development (OECD) said on Thursday, upgrading its outlook.

The global economy would maintain the 3.1% growth rate seen last year and pick up marginally to 3.2% next year, the OECD said, upgrading forecasts dating from February for growth of 2.9% this year and 3% in 2025.

A faster than expected fall in inflation set the stage for major central banks to begin rate cuts in the second half of the year while also fueling gains in consumers’ incomes, the OECD said in its latest Economic Outlook.

However, the speed of recoveries diverged widely, the OECD warned, saying lingering sluggishness in Europe and Japan was being offset by the United States, whose growth forecast was hiked to 2.6% this year from a previous estimate of 2.1%.

Next year US growth was expected to cool to a rate of 1.8%, up slightly from 1.7% in February.

Boosted by fiscal stimulus, China’s economy was also expected to grow faster than expected with its growth now forecast at 4.9% in 2024 and 4.5% in 2025, up from 4.7% and 4.2% respectively in February.

While weakness in Germany would continue to weigh on the broader euro zone, the bloc’s growth was projected to pick up from 0.7% this year to 1.5% next year as lower inflation boosts households’ purchasing power and paves the way for rate cuts. The OECD had previously forecast euro zone growth of 0.6% this year and 1.3% in 2025.

Britain’s outlook was one of the few to be downgraded with the OECD now forecasting only 0.4% this year compared with 0.7% previously. As interest rates start coming lower from the third quarter of this year, UK growth was seen picking up to 1% in 2025, compared with 1.2% expected in February.

Meanwhile, in Japan, income gains, easy monetary policy and temporary tax cuts would help its growth rate to accelerate from 0.5% in 2024 to 1.1% in 2025, compared with forecasts of 1% for both years previously, the OECD said. — Reuters

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