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Japan’s economy expands 0.9% in Q3 on tepid capex

STOCK PHOTO | Image by Josh Soto from Unsplash

TOKYO – Japan’s economy expanded by an annualized 0.9% over the July-September quarter, government data showed on Friday, slowing from the previous three months due to tepid capital spending.

The slower growth data highlights Japan’s frail economic recovery, as domestic demand has not fully picked up while a growing risk of a slowdown in the U.S. and further weakness in China’s economy could weigh on exports ahead.

The increase in gross domestic product compared with a median market estimate of a 0.7% gain, and followed a revised 2.2% growth in the previous quarter, the data showed.

The reading translates into a quarterly rise of 0.2%, versus a 0.2% increase expected by economists in a Reuters poll.

Private consumption, which accounts for more than half of the economic output, rose 0.9%, compared with a market estimate of a 0.2% increase.

It picked up slightly from the revised 0.7% rise of the previous quarter, indicating that rising wages are prompting households to spend more.

Capital spending, a key driver of private demand-led growth, fell 0.2% in the third quarter, matching a decrease of 0.2% in the Reuters poll.

Net external demand, or exports minus imports, knocked 0.4 point off growth, reversing a 0.1 point negative contribution in the April-June period.

The Bank of Japan maintained ultra-low interest rates last month and said risks around the U.S. economy were somewhat subsiding, signalling that conditions are becoming conducive to raise interest rates again. — Reuters

Global crypto market tops $3 trillion on hopes of Trump-fuelled boom

REUTERS

SINGAPORE – The global cryptocurrency market’s value has topped $3 trillion as the election of Donald Trump as U.S. president spurred bets that friendlier U.S. regulation could usher in a new boom for all corners of the asset class.

The sum market value of cryptocurrencies touched a high of nearly $3.2 trillion early on Nov. 14 in Asia, based on analytics and data aggregator CoinGecko, and was last just shy of that level.

That puts it above the heady days of 2021, when pandemic-era stimulus pumped up speculative investments, and marks a revival from just a few months ago when crypto prices and turnover had flatlined.

Bitcoin dominates the crypto market and the market value milestone coincided with the token’s rise to a record $93,480 BTC=.

“Generally the way this market goes is bitcoin will break out and then the rest of the altcoins will follow,” said Matthew Dibb, chief investment officer at cryptocurrency asset manager Astronaut Capital.

“So there is that gradual rotation of capital…and then we can expect the total market cap to increase.”

Trump’s election, and that of several pro-crypto lawmakers to U.S. Congress, has driven the wave of euphoria by potentially clearing some uncertainty around U.S. regulations.

Bitcoin, last trading around $91,500, has doubled this year and is up 30% since the U.S. election on Nov. 5 to $90,000. Smaller cryptocurrency ether ETH= is up about 33% since the vote to $3,220.
Dogecoin DOGE=KRKN, an alternative and volatile token promoted by billionaire Trump-ally Elon Musk, has gained 140%.

Crypto exchange-traded funds have also been snapped up, possibly an indicator of buying by financial institutions which tend to shy away from directly holding cryptocurrencies.

Spot bitcoin ETFs have attracted about $4.05 billion in net flows since Nov. 6, based on Refinitiv Lipper data, around 15% of the total inflows since they launched in January.

“People wanted more exposure to crypto, clearly, from the Trump presidency and they wanted more risky asset exposure in general,” said David Glass digital assets strategist at Citi.

“From the crypto front, there’s the story of removing regulatory headwinds, and the potential strategic bitcoin reserve.”

Trump has made reference to a U.S. “strategic bitcoin reserve”, similar to that of gold, which would be held by the U.S. government, but the details are unclear.

The current upsurge could have further to run.

“Bitcoin enthusiasts are known for bold predictions, but hitting $100,000 by year-end seems feasible,” said Carl Szantyr, founder and managing partner at Blockstone Capital.

DEJA VU
The explosive rally is the latest in the boom-bust roller coaster that had bitcoin below $20,000 at the start of last year, in the depths of the “crypto winter” that followed the collapse of brokerage FTX and other crypto projects.

To be sure, cryptocurrencies’ market value is dwarfed by traditional asset classes. At current prices, the value of the 209,000 tonnes of gold the World Gold Council says has been mined in history is worth nearly $19 trillion.

The market capitalization of the S&P 500 index is $50.6 trillion.

Some parts of the ecosystem do also not show signs of recovery and others point to a degree of caution. Average sales prices for non-fungible tokens have been around $2,000 since May, according to NonFungible.com, which tracks the Ethereum and Ronin blockchains, and have kicked up, but only to about $2,700.

In Singapore DBS Bank, which operates a digital exchange, said while trading had surged and it had executed more than one-third of last year’s total volume in the first ten days of November, investors were not yet heading into the more obscure parts of the market.

“We’ve not seen our clients shift their assets towards more exotic platforms or decentralized exchanges,” said David Hui, chief commercial officer of DBS Digital Exchange.

Still, those in the industry say the renewed attention will bring momentum.

“There’s increased interest and willingness to look at DeFi and other possibilities associated with blockchain,” said Danny Chong, a co-founder of decentralized asset tracking platform Tranchess.

“The heightened market capitalization, which if sustained for a longer period, would likely also invite deeper interest into new and existing themes,” he said, including tokenization of real world assets and blockchain-based payment services. — Reuters

Powell says no need for Fed to rush rate cuts given strong economy

FEDERAL RESERVE

DALLAS – Ongoing economic growth, a solid job market, and inflation that remains above its 2% target mean the Federal Reserve does not need to rush to lower interest rates, Fed Chair Jerome Powell said on Thursday in remarks that may point to borrowing costs remaining higher for longer for households and businesses alike. Powell affirmed that he and his fellow policymakers still consider inflation to be “on a sustainable path to 2%” that will allow the U.S. central bank to move monetary policy “over time to a more neutral setting” that isn’t meant to slow the economy.

But what that neutral rate might be in the current environment and how quickly the Fed might try to reach it all remain up in the air, particularly as central bankers assess both the ongoing strength of the economy and the impact the incoming Trump administration’s policies, from higher tariffs to less immigrant labor, may have on economic growth and inflation.

Powell largely deflected questions about how new tariffs on imports or running the economy with fewer workers might alter the path of inflation the central bank has been trying to lower.

“We can do the arithmetic. If the are fewer workers there’ll be less work done,” Powell said, before adding “this is getting me into political issues that I really want to stay as far away from as I possibly can.”

As of now, he said the economy was sending no distress signal that might prompt the Fed to accelerate rate cuts, and to the contrary “if the data let us go a little slower, that seems a smart thing to do.”

“The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully,” Powell said in prepared remarks delivered at a Dallas Fed event.

Fed officials and investors are taking stock of how continued U.S. economic strength and the uncertainty around the economic agenda of President-elect Donald Trump’s administration, particularly regarding tax cuts, tariffs and an immigration crackdown, may affect economic growth and inflation.

After Powell’s prepared remarks yields on shorter-term Treasury bonds rose, and traders pared bets about how far the Fed might cut rates in this cycle. The central bank cuts its benchmark overnight right to a 4.5% to 4.75% range at a meeting last week. As of September officials saw the rate dropping as far as 2.9% in 2026, but investors now see it remaining as high as 3.9%.

“We still think the FOMC is likely to cut at December but think today’s speech opens the door to dialing down the pace of easing as soon as January,” wrote JP Morgan chief U.S. economist Michael Feroli.

NO OBVIOUS ANSWER
During a question-and-answer session, Powell said that while Fed staff may begin puzzling through the possible impact of tariffs and other campaign proposals from Trump, it will take time to understand, and won’t become clear until new laws or administrative edicts are approved or issued.

“The answer is not obvious until we see the actual policies,” Powell said. “I don’t want to speculate…We are still months away from a new administration.”

Still, he noted that economic conditions are different now than when Trump began his first term eight years ago, when there was lower inflation, lower growth and lower productivity.

A recent surge in immigration, for example, “made for a bigger economy” at a time of post-pandemic labor shortage, Powell said.

More broadly, following an election last week that may have turned on voter perceptions of the nation’s economic ills, Powell said the current situation was actually “remarkably good.”

The economy’s strengths include a still-low 4.1% unemployment rate, growth at what Powell called a “stout” 2.5% annual pace that remains above Fed estimates of its underlying potential, consumer spending driven by rising disposable income, and growing business investment.

Yet key measures of inflation remain above target.

The personal consumption expenditures price index for October has not been released yet, but Powell said recent data that feeds into it indicates the PCE excluding food and energy costs rose at a 2.8% rate last month – which would mark a fourth consecutive month in which progress on inflation by that measure has stalled.

The Fed uses the headline PCE reading to set its 2% inflation target – Powell said that figure likely was around 2.3% in October – while the “core” measure is considered a guide to the direction of underlying inflation.

Traders still expect the Fed to cut interest rates by another quarter of a percentage point at its Dec. 17-18 meeting, and Powell said the central bank still has faith in continued disinflation.

But policymakers also remain on guard.

Major aspects of inflation “have returned to rates closer to those consistent with our goals … We are watching carefully to be sure that they do … Inflation is running much closer to our 2% longer-run goal, but it is not there yet,” he said. — Reuters

Malaysia to protest to Philippines over its new maritime laws

REUTERS

KUALA LUMPUR – Malaysia will send a protest note to the Philippines over its new maritime laws due to their overlapping claims in the South China Sea, its deputy foreign minister said on Thursday.

The protest will follow a complaint also from China over the Philippines’ Maritime Zones Act and the Archipelagic Sea Lanes Act, which Manila said was intended to strengthen its maritime claims and bolster its territorial integrity.

Malaysia’s Deputy Foreign Minister Mohamad Alamin said the government has reviewed the reference documents related to the Philippines’ laws and found that they touch upon claims to the Malaysian state of Sabah on Borneo island.

“We will send a protest note today to demonstrate our commitment to defending Sabah’s sovereign rights and the sovereignty of our country,” Mohamad told parliament.

The Philippines’ foreign ministry did not immediately respond to request for comment.

The Philippines has a dormant claim to the eastern part of Sabah dating back to colonial times, but official statements on the issue are rare. Its Supreme Court in 2011 ruled that the claim has never been relinquished. — Reuters

Cebu Pacific to launch direct flights between Manila and Sapporo

Cebu Pacific (PSE: CEB), the Philippines’ leading carrier, is set to launch the only direct flights between Manila and Sapporo in January next year, making air travel to the City of Snow much more exciting and affordable with the airline’s signature low fares.

Starting Jan. 16, 2025, CEB will operate flights between Manila and Sapporo three times weekly — every Tuesday, Thursday, and Saturday. CEB will be the only airline to offer direct flights between these two cities.

“We are thrilled to be the only carrier to offer non-stop flights between Manila and Sapporo. The launch of this route is a testament to Cebu Pacific’s mission of expanding its international network and making air travel accessible to a wider range of passengers. We are excited to offer more Filipinos the opportunity to experience the winter charm of Sapporo,” said Xander Lao, CEB President and Chief Commercial Officer.

With the launch of CEB’s direct Manila-Sapporo flights, travelers can cut their travel time to only around five hours compared to up to 10 hours on other airlines with layovers.

Filipino travelers can also now look forward to participating in the world-renowned Sapporo Snow Festival in February, snowboarding in the Teine Ski Resort, or visiting the Jozankei Onsen for its relaxing baths and natural views.

Passengers may use their existing Travel Funds to book flights and avail themselves of other add-ons. CEB also offers other payment options, including credit or debit cards and e-wallets.

CEB operates in 35 domestic and 27 international destinations spread across Asia, Australia, and the Middle East.

Book your flights now at bit.ly/CebuPacificSale.

 

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Inflation seen within target until 2026

The headline inflation rate picked up to 2.3% in October from 1.9% in September. — PHILIPPINE STAR/EDD GUMBAN

PRIVATE SECTOR ANALYSTS surveyed by the Bangko Sentral ng Pilipinas (BSP) still expect headline inflation to remain within the 2-4% target band until 2026.

In its Monetary Policy Report from its October meeting, the central bank said that economists’ inflation expectations “remain well-anchored.”

The BSP’s survey of external forecasters for October showed that the mean inflation forecasts for 2024 and 2026 were unchanged at 3.4% and 3.2%, respectively, compared with September forecasts.

Meanwhile, the mean inflation forecast for 2025 was trimmed to 3% from 3.1% previously.

“Analysts consider the inflation risks to be broadly balanced, with headline inflation expected to remain low and within-target over the policy horizon,” the BSP said.

The BSP’s baseline forecasts see inflation settling at 3.1% this year, 3.2% in 2025 and 3.4% in 2026.

Headline inflation picked up to 2.3% in October, bringing the 10-month average to 3.3%.

The central bank said that the balance of risks to the inflation outlook for 2025 and 2026 shifted to the upside but will likely continue to remain within target.

“Inflation is expected to settle near the low end of the target band due to the impact of reduced tariffs on rice imports,” it said.

An executive order that slashed tariffs on rice imports to 15% from 35% until 2028 took effect in July.

“However, by the second half of 2025, inflation could rise toward the upper end of the target range, largely due to positive base effects,” it added.

It also noted that the upside risks are mainly due to “potential adjustments in electricity rates and higher minimum wages in regions outside Metro Manila.”

“Meanwhile, downside risks continue to be linked to the impact of lower import tariffs on rice,” the central bank said.

“Nevertheless, after incorporating the impact of these risks at their assigned probabilities, the risk-adjusted inflation forecasts remain within the 2-4% target range over the policy horizon.”

The BSP said the inflation outlook and inflation expectations allow it to adopt a “less restrictive monetary policy” stance.

“Nonetheless, the monetary authority will continue to closely monitor the emerging upside risks to inflation, including geopolitical factors.”

The Monetary Board is set to have its last policy review for the year on Dec. 19. BSP Governor Eli M. Remolona, Jr. has said it is possible to deliver a 25-basis-point (bp) rate cut at the meeting.

The central bank has reduced interest rates by a total of 50 bps since August or when the BSP kicked off its cutting cycle.

GROWTH
Meanwhile, the BSP expects gross domestic product (GDP) growth to remain resilient.

“The Monetary Board also expects domestic economic growth to continue to be strong,” it said.

“This reflects improved prospects for household income and consumption, investments, and government spending, which are supported by the start of the monetary easing cycle in August and the announced reduction in reserve requirements in October.”

In the nine-month period, GDP averaged 5.8%. To meet the lower end of the government’s 6-7% goal, the economy must grow by at least 6.5% in the fourth quarter.

“This outlook is supported by the policy interest rate reduction in August and the reduction in reserve requirements in October,” the BSP said.

“The forecast is consistent with the small negative output gap in 2024 and 2025, which is expected to turn positive in 2026. The steady upturn in the output gap reflects improved prospects for household consumption, investments, and government spending.” — Luisa Maria Jacinta C. Jocson

PHL slips in global digital competitiveness ranking

THE Philippines remained one of the most digitally uncompetitive countries, according to a report by the International Institute for Management Development’s World Competitiveness Center. — PHILIPPINE STAR/EDD GUMBAN

By Justine Irish D. Tabile, Reporter

THE PHILIPPINES slumped to its worst showing in the World Digital Competitiveness Ranking by the International Institute for Management Development (IMD), mainly due to a decline in talent and scientific concentration. 

The country slid two spots to 61st place out of 67 economies, scoring 45.18 in the 2024 World Digital Competitiveness Ranking, conducted by the World Competitiveness Center.

This was the Philippines’ lowest ranking since the report started in 2017.

Among 14 Asia-Pacific economies, the Philippines ranked 13th, ahead only of Mongolia (64th).

Singapore ranked first in the global digital competitiveness index with 100 points, followed by Switzerland and Denmark.

The ranking measures a country’s capacity to adopt and explore digital technologies to transform government practices, business models and society in general.

It measures a country’s capacity in three key factors: knowledge or the quality of human capital, excellence of technological infrastructure and future readiness.

The Philippines ranked 64th in the knowledge factor, 58th in future readiness and 56th in technology.

“The decline is mainly driven by a drop in talent and scientific concentration. There is also a downturn in the technology and regulatory frameworks,” said José Caballero, senior economist at the IMD World Competitiveness Center, in an e-mail.

The country saw the steepest drop in the technology pillar, falling five places from 51st last year.

According to IMD, the country showed weakness in the ease of starting a business (65th), enforcing contracts (64th), communications technology (66th), and secure internet servers (64th).

However, the Philippines showed promising performance in investments in high-tech exports (2nd) and telecommunications (9th).

The country also slid one spot in knowledge and future readiness, amid low ranking in talent (60th), training & education (62nd) and scientific concentration (61st).

According to IMD, the Philippines’ strength in the knowledge factor lies in its graduates in sciences (22nd) and its female researchers (2nd).

For future readiness, IMD said the country showed strength in flexibility and adaptability (19th spot).

“In terms of future readiness, while there has been an improvement in adaptive attitudes, that is societal attitudes toward new technologies, business agility and information technology integration remain stagnant,” he added.

According to Mr. Caballero, prioritizing the development of relevant talent and the country’s R&D (research and development) capabilities are keys to improvement.

“In addition, there is room for improvement in the regulatory framework’s support for the development of new technologies, [while] strengthening the adoption and integration of new technologies across the societal, private, and public sectors is also fundamental,” he added.

Asian Institute of Management’s (AIM) Rizalino S. Navarro Policy Center for Competitiveness, IMD’s local partner institute in the report, said that the Philippines was the weakest in the knowledge component.

“[This] reflects the level of our human capital and our investments in it. We are trailing behind regional peers in terms of improvements in basic education and training,” said Jamil Paolo S. Francisco, executive director of the AIM Rizalino S. Navarro Policy Center for Competitiveness, in an e-mail.

However, he said that the decline in the ranking does not mean that no progress has been made, but simply that other economies are improving at a faster pace.

“Basic education remains the foundation for any upskilling needed to adapt to rapidly changing technologies and economic demands. We need to get that right before we can expect to reap the benefits of technological advancement,” he added.

For the country to improve its ranking, Mr. Francisco said that the country should start with getting the basics right.

“We need more sustainable investments in education and infrastructure — begin with solid foundations in basic education and skills development to leverage technological advancements,” he said.

“Additionally, creating an enabling environment in terms of regulation, access to resources, and access to markets is crucial. Modernizing rules and frameworks to match the new needs and realities of companies, consumers, and workers is essential for progress,” he added.

Sought for comment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the country’s declining performance in digital competitiveness can be attributed to the emergence of new technologies.

“The fast pace of digitalization globally with the emergence of new technologies such as artificial intelligence is widening the digital divide among countries, consistent with the wealth gap,” said Mr. Ricafort in a Viber message.

“As [well-off] countries digitize further, [the more they] would be far ahead than those that are worse off and far behind,” he added.

Because of this, he said that there is an urgent need for the Philippine economy to boost digitalization.

“There is an urgent need for the Philippines to digitize further… to have more competitive infrastructure and to create a favorable environment that is more conducive to more technological advances that will boost the country’s productivity,” he added.

GEOPOLITICAL TENSIONS
The IMD report also explored the key challenges that hinder the advancement of digital competitiveness in the countries, such as geopolitical tensions.

Mr. Caballero said the geopolitical rivalry between the US and China are among the conflicts that could compromise how other countries compete at the global level.

“Geopolitical rivalries… are fragmenting the digital landscape, influencing not only how other countries develop and use digital technologies but also their ability to compete globally,” Mr. Caballero said in a statement on Thursday.

“It is therefore likely that any new tariffs will encompass national security-related elements. That is, tensions over technology and security concerns could also intensify, leading the US to further curtail China’s access to advanced technology,” he added.

US President-elect Donald J. Trump is seeking to impose 60% or higher tariffs on all Chinese goods and a 10% universal tariff once he assumes office in January 2025.

Mr. Caballero said that the geopolitical tensions have led to increased competition for digital dominance, which resulted in the fragmentation of global digital governance.

“In turn, such fragmentation can hinder collaboration on issues like cybersecurity and data privacy, which are essential for a balanced and secure digital ecosystem,” he said.

“In addition, fragmentation, by hampering collaboration, can increase the level of digital disparities among countries,” he added.

Foreign investment pledges surge in Q3

Filipinos work at the assembly line of a factory in Malvar, Batangas, Aug. 10, 2018. — REUTERS

FOREIGN INVESTMENT pledges received by Philippine investment promotion agencies (IPA) surged in the third quarter, driven by investments from South Korea and Switzerland, the statistics agency reported.

Preliminary data from the Philippine Statistics Authority (PSA) showed the value of foreign commitments approved by IPAs soared by 434.4% year on year to P146.75 billion in the July-to-September period from P27.46 billion in the third quarter of 2023.

Despite the strong annual growth, the amount was the lowest in investment commitments since the third quarter of 2023.

Quarter on quarter, it also slid by 22.56% from P189.5 billion in the second quarter.

South Korea was the top source of foreign investment pledges in the third quarter with P53.72 billion (36.6%), followed by Switzerland with P51.84 billion (35.3%). Investment commitments from Japan stood at P15.96 billion (10.9%).

The PSA compiles investment pledges approved by the government’s six IPAs: Board of Investments (BoI), BoI-Bangsamoro Autonomous Region in Muslim Mindanao (BoI-BARMM), Clark Development Corp. (CDC), Cagayan Economic Zone Authority (CEZA), Philippine Economic Zone Authority (PEZA), and Subic Bay Metropolitan Authority (SBMA).

The BoI approved P70.34 billion in foreign investment pledges, accounting for 47.93% of this quarter’s total.

PEZA approved P58.38 billion worth of foreign investment pledges, which accounted for 39.78% of the total. This was followed by CDC with P14.66 billion, BoI-BARMM with P86.7 million, SBMA with P53 million, and CEZA with P3.24 million.

The Calabarzon Region accounted for 40.1% of the pledged foreign investments with P58.86 billion. This was followed by the Bicol Region with P51.84 billion and Central Luzon with P15.2 billion.

The manufacturing industry received nearly half of approved pledges with P70.57 billion, followed by electricity, gas, steam, and air-conditioning supply industry with P51.92 billion and real estate activities with P13.13 billion.

Foundation for Economic Freedom President Calixto V. Chikiamco said in a Viber message that the growth in foreign investment pledges could be attributed to the liberalization of investment laws, such as the amendments to the Public Service Act.

“Aside from reducing the cost of doing business with better infrastructure and less red tape, the government can further spur foreign investments by further liberalizing our restrictive anti-FDI laws, primarily the Constitution,” he said.

First Metro Investment Corp. Head of Research Cristina S. Ulang said the higher investment pledges reflect President Ferdinand R. Marcos, Jr.’s “untiring global investment promotion” for the country.

The Department of Trade and Industry reported in June that a total of $19 billion worth of investments pledged during Mr. Marcos’ foreign trips have been actualized or implemented.

She also noted the newly signed Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) law could help attract foreign investments.

CREATE MORE expands incentives and lowers corporate income tax on businesses registered with IPAs.

“Very sustainable given the more competitive fiscal incentives and greater emphasis for ease of doing business in the country,” Ms. Ulang said in a Viber Message to BusinessWorld.

Mr. Chikiamco said he expects more investments from South Korea once the free trade agreement (FTA) takes effect.

The Senate in September ratified the FTA between the Philippines and South Korea, which will remove Philippine tariffs on 96.5% of goods from South Korea, while Seoul will lift tariffs on around 94.8% of Philippine products.

However, the FTA is still undergoing the ratification process at the Korean National Assembly.

Mr. Chikiamco said the government needs to forge more free trade deals with the European Union, Canada, and the United Arab Emirates.

“Short of any negative geopolitical event, this momentum of increased foreign investments will probably be sustained,” he added.

PSA data also showed investment pledges of foreign and Filipino nationals surged by 542% to P541.29 billion in the third quarter. Of this, Filipino nationals pledged P394.54 billion in investments.

PSA data on foreign investment commitments, which may materialize in the near future, differ from actual foreign direct investments tracked by the Bangko Sentral ng Pilipinas for the balance of payments. The central bank’s monitoring goes beyond the projects and includes other items such as reinvested earnings and lending to Philippine units via their debt instruments. — Aubrey Rose A. Inosante

Double-digit credit growth to continue until 2025 — S&P Global

A worker fixes an air-conditioning unit behind the logo of a bank in Manila, July 1, 2014. — REUTERS

By Luisa Maria Jacinta C. Jocson, Reporter

LOWER INTEREST RATES and easing inflation will fuel double-digit credit growth in the Philippines through 2025, S&P Global Ratings said.

“Credit growth could improve. Higher economic growth, along with lower inflation and interest rates, will support credit demand,” S&P Global Primary Credit Analyst Nikita Anand said in a report.

“We forecast credit growth of 10%-12% in 2024 and 2025, compared with 8% in 2023,” she added.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that bank lending grew by 11% in September, its fastest pace in nearly two years.

S&P said this outlook is driven by expectations that interest rates will normalize over the next year.

“We forecast policy rates could decrease to 5.5% in 2024 and 4.25% in 2025 as inflation stays moderate. This should also help contain asset quality risks emanating from a higher share of consumer lending.”

Since August, the central bank has reduced borrowing costs by 50 basis points (bps), bringing the key rate to 6%.

The Monetary Board’s final policy review for the year is set for Dec. 19.

BSP Governor Eli M. Remolona, Jr. earlier signaled the possibility of a 25-bp rate cut next month, which would bring the benchmark to 5.75% by yearend if realized.

Mr. Remolona also earlier said the BSP can deliver up to 100 bps worth of rate cuts for next year, though not necessarily every quarter or every meeting.

Philippine headline inflation averaged 3.3% in the first 10 months, within the BSP’s 2-4% target.

The BSP expects inflation to average 3.1% this year and 3.2% in 2025, both well within the target band.

Meanwhile, S&P Global said that economic growth will also support lending demand.

The credit rater sees Philippine gross domestic product (GDP) expanding by 5.7% this year and 6.2% in 2025.

The economy grew by a weaker-than-expected 5.2% in the third quarter, the weakest growth in five quarters. In the first nine months, GDP growth averaged 5.8%.

BANKING SECTOR OUTLOOK
Meanwhile, S&P Global said that the country’s banking system remains resilient.

“Banks maintain good buffers. Philippine banks are well positioned for growth with a sound capital position (15.7% Tier-1 ratio)… They have also maintained adequate provisioning, although we believe some write-back of pandemic-related provisions is likely amid a buoyant economic backdrop,” it said.

Under S&P’s Banking Industry Country Risk Assessment (BICRA), the Philippines is categorized under group 5.

The BICRA aims to “evaluate and compare the relative strength of global banking systems.”

BICRA scores are on a scale from one to 10, with group 1 representing the lowest-risk banking systems and group 10 being the highest risk.

Credit losses are also seen to “stay flattish,” S&P Global said.

“We expect the sector’s credit costs to stay at 0.5%-0.6% of gross loans over the next two years. The rising share of higher-risk (and higher-yielding) consumer loans is likely to lead to a manageable deterioration in the nonperforming loan ratio.”

“Large corporates, which form the bulk of the sector’s loan portfolio, should remain resilient. Banks with higher exposure to unsecured loans could see elevated credit costs as the portfolio matures,” it added.

On the other hand, it expects banks’ profitability to decline as margin expansion weakens.

“Earnings could moderate over the next two years. The sector’s return on average assets could normalize to the long-term average of 1.2%-1.4% over the next two years, after peaking at about 1.5% in 2023.”

“This is because net interest margins will decline in line with policy rates. A moderating cost-to-income ratio and increasing share of retail loans could push profitability above our forecast.”

S&P Global also flagged risks such as disruptions in the property market.

“A sharp correction in asset prices would hurt asset quality given banks’ sizable exposure to the residential and commercial real estate markets. Real estate loans form about 21% of sector loans; two-thirds are commercial real estate loans,” it said.

The exposure of Philippine banks and trust entities to the property sector declined to 19.92% at end-June, the latest central bank data showed.

This was its lowest ratio in four and a half years or since the 19.84% seen as of December 2019.

“Notably, office vacancy rates have stayed sustainably elevated in Metro Manila. While a fallout in the property sector is not our base case, it is a key downside risk amid higher interest rates and challenging global credit conditions,” S&P added.

Hann Casino Resort’s major expansion is all set in Clark, Pampanga

Hann Casino Resort Expansion Facade

Hann Philippines, Inc. proudly announces its major expansion project for Hann Casino Resort, its flagship property at the heart of Clark Freeport Zone. This reinforces its commitment to leadership excellence in gaming and hospitality, and real estate development in Central Luzon. Since it opened in 2021, Hann Casino Resort’s impressive architectural structure has become an iconic landmark of Clark, located at the corner of M.A. Roxas and Claro M. Recto Avenues. Standing on the 11-hectare property is officially the first fully-integrated resort in Central Luzon. Three years of growth in Clark, the positive outlook for tourism and gaming in the region are significant indicators to proceed with an expansion plan that will address current market demands and introduce new concepts that will excite our discerning markets and lifestyle seekers.

PROJECT CONCEPT & TIMELINE

The expansion project adds an impressive 22,113 sq.m. to the existing Hann Casino Resort, creating a vibrant space for both gaming and non-gaming activities. With 5,093 sq.m. dedicated to gaming, ground floor area of 3,590 sq.m. for over 60 new gaming tables and more than 500 slot machines, and a second-floor area of 1,504 sq.m. for private gaming and dining.

Gaming Area

Part of the expansion project is a set of brand-new concepts of cafe and restaurants. On the second floor VIP gaming area will be a specialty restaurant that will serve Korean, Japanese and Chinese fine-dining options.

On the ground floor will be a casual dining experience of this flavorful East Asian cuisine from Korea, Japan and China. At the crossings that lead to the new wing/expansion area will be an amazing central coffee & tea haven that will take everyone on a journey to the Silk Road with its wide range of coffee and tea selection sourced from all over the world. Every cup tells a tale. This sanctuary blends naturally into a friendly cocktail and wine lounge in the evenings for a most cozy nightlife.

Cafe/Bistro Area

The first phase of the expansion project will be completed by the 4th quarter of 2025. Full completion target on the first quarter of 2026.

BANK PARTNERS

Hann Philippines has a proven history of collaboration with its bank partners since 2019 with UnionBank and Asia United Bank Corp. (AUB).

L-R: Shella Marie E. Lipio, Assistant Vice-President, Asia United Bank Corp.-Trust & Investments Group; Kristeen Ella M. Reyes, Senior Vice-President, Asia United Bank Corp.; Ernesto T. Uy, Executive Vice-President, Asia United Bank Corp.; Dae Sik Han, Chairman & CEO, Hann Philippines, Inc.; Mitchell A. Estacio, Vice-President for Finance, Hann Philippines, Inc.; Antonino Agustin A.S. Fajardo, Executive Vice-President, Union Bank of the Philippines; and Jessine Y. Gamo, Vice-President, Union Bank of the Philippines

Specific to this Hann Casino Resort expansion project, Hann Philippines, Inc. has signed a P6-billion omnibus loan agreement with AUB and Union Bank of the Philippines to partially finance the ongoing construction and development on Nov. 12, 2024 at the Clark Marriott Ballroom. This support is another testament of the banks’ enduring trust and confidence in Hann’s capabilities in property development, bold innovations and progressive I.R. (integrated resort) business outlook.

“Hann Philippines has consistently demonstrated its commitment to innovation and growth. We are proud to support this expansion project and look forward to our continued partnership,” stated Ernesto Uy, Executive Vice-President of AUB.

Antonino A.S. Fajardo, Executive Vice-President of UnionBank, further added that “Hann Philippines has established itself as a leader in the industry and is committed to differentiated products and superb customer experience. They already have a large economic footprint in Clark and this expansion further affirms their long-term vision and strategy.”

Dae Sik Han, Chairman and CEO of Hann Philippines, expressed his appreciation to his partners, “I extend my heartfelt gratitude to our bank partners for their unwavering trust and support for Hann Philippines. Together, we are creating a vibrant future not just for our company but for the region’s tourism and economic development.”

 

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’Tis the season to drive home your dream car

The landscape of auto loan applications has undergone a significant transformation, with digital solutions taking center stage. PSBank, the leading thrift bank in the Philippines, is at the forefront of innovation, making auto loan applications more inclusive and accessible than ever.

Applying for an auto loan can be scary and intimidating. It can also be a tedious process for some. Gone are the days of long queues at the bank because PSBank Online Loan Application (POLA) can be accessed via PSBank’s official website, you can receive your auto loan decision approval in as fast as 24 hours. You can also join PSBank’s exciting promo for new auto loan applications — get a chance to win cash prizes or fuel vouchers. Learn more about the details as you read along.

With this, there is no need to suffer from long commute hours. You and your family can enjoy the luxury of traveling comfortably in your own car. Best of all, you have control over your time — there’s no need to rush going from one place to another.

Convenience at your fingertips

With the aim of simplifying auto loans and helping more Filipinos drive home their dream car, PSBank made available an online option that allows customers to apply for auto loans from the comfort of their homes — anytime, anywhere. This initiative not only enhances customer experience but also streamlines the entire loan application process.

You may conduct a self-assessment to know if you are qualified to apply for an auto loan or you can also use the Loan Calculator to compute the monthly amortization that matches your budget.

With these simple steps below, you can soon drive your own car via PSBank Auto Loan:

  1. Fill out the application form. An SMS will be sent to your registered mobile number that your application is in process.
  2. A PSBank Auto Loan representative will reach out to you with other details.
  3. Get your loan decision in hours and get ready to drive away in your new vehicle!

There is no need to submit any requirements during your application. Likewise, the documentary requirements will only be requested once the loan decision is approved and will only be submitted during signing of documents. 

Fast and efficient

The digital platform has significantly reduced processing time. Traditional methods often require several days, if not weeks, to complete the approval process. However, PSBank Auto Loan application is designed to provide a quicker response, enabling customers to finance their vehicles in a timely manner. In as fast as 24 hours, applicants can get the decision on their loan application.

Inclusive ease of access

The rise of digital platforms has also made auto loans more accessible to a broader audience. With the online application platform, those individuals residing in remote areas who wish to upgrade their car or get a new car can apply for a loan without needing to travel long distances to the nearest bank branch. This inclusivity aligns with PSBank’s commitment to reaching and serving a diverse range of customers. PSBank not only caters to the modern consumer’s need for efficiency but also reinforces its commitment to continuously improve its services for its clients — proactively providing solutions to most financial concerns.

From Oct. 15 until Dec. 31, 2024, PSBank is offering an exciting promo where customers stand a chance to win PHP 10,000 to be credited to their PSBank account or up to PHP 50,000 worth of fuel e-vouchers with their auto loan application. Visit PSBank’s promo page to learn how you can qualify for the promo.

To know more about PSBank auto loans or apply for an auto loan today, visit https://www.psbank.com.ph/loans/auto.

 

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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What makes a successful leader

MicroSourcing and Beepo CEO Haidee C. Enriquez is hailed by the Asia CEO Awards as the Woman Leader of the Year for 2023.

By Bjorn Biel M. Beltran, Special Features and Content Assistant Editor

A Swedish proverb states, “Rough waters are truer tests of leadership. In calm water, every ship has a good captain.”

True enough, in times such as the present where the business landscape shifts like the changing tides, the value of true leadership becomes clear to all. Coming from the COVID-19 pandemic, everyone in the world has had to adjust in some way, whether it is working from home or taking classes online.

Such unexpected alterations to our way of life have had an impact on our principles and values. There has never been a more important time to consider what it means to be a leader and an aid to others than now.

This is the driving purpose of the Asia CEO Awards, held last Oct. 24 at the Manila Marriott Grand Ballroom in Pasay City. Each of the 15 categories in the awards ceremony hails notable organizations and leaders that have made important contributions to their industries and the country’s development. These organizations and leaders are selected to be part of Asia CEO’s distinguished Circle of Excellence in their respective categories. One of these Circle of Excellence awardees was hailed as the grand winner during the awarding ceremony.

The categories cover a wide range of categories and spans many different industries, recognizing the best companies in terms of innovation, sustainability, service excellence, corporate social responsibility, employment, and many more.

The Asia CEO Awards attempts to give answers to questions that are certain on every business leaders’ mind: In the wake of hurdles like the pandemic, the emergence of disruptive technologies like artificial intelligence, and socioeconomic challenges, what does it take to lead effectively in the new world? What qualities are necessary to thrive in the face of such daunting global and social challenges as climate change, the annihilation of our natural environment, and pervasive inequality?

When asked these questions, Asia CEO Awards Woman Leader of the Year Haidee Enriquez, the chief executive of business process outsourcing companies MicroSourcing and Beepo, responded with her own guideline for leadership: the acronym D.A.R.E.

“D stands for Dream. A stands for Act. R stands for Renew or Reinvent, and then E stands for Enjoy,” she said in an interview with BusinessWorld.

In the face of difficult challenges, Ms. Enriquez pointed out that a leader, first and foremost, should be the person in charge of creating a vision for a company to rally towards.

“The second one is act. Of course, we can dream all we want. But if we’re not willing to put in the action that’s necessary to be closer and closer to the realization of that dream then it’s just pointless, right?” she said, adding that it is essential for leaders to be the central role models for such actions to take place.

“Team members who have worked with me, including those who are in MicroSourcing, would often describe me as mangbubudol,” she shared with a laugh.

“According to them, I have a unique ability to make people do things that otherwise they would not have done or would not have even thought possible. I’d like to believe that it probably had something to do with the fact that they see me do it first. That they know and they see that I would not ask them to do something that I myself would not do. And because of that, it either inspires them or forces them to at least try.”

Ms. Enriquez admitted that she would not have gotten as far as she has in her field if not for her tenacity in reinventing and renewing her principles with regards to her work. She shared that she constantly had to ask more experienced members of the management team questions about how things were done in order for her to understand the landscape she was operating in.

Under her leadership, MicroSourcing and Beepo’s expansion pivoted to regions outside of Metro Manila, and have grown from 3,500 professionals to more than 8,000 in almost three years. More than half, or about 54% of them are now located in provincial locations. In addition, the companies’ Balik Eskwela program has benefitted more than 7,400 learners from far-flung public elementary schools across the country since their launch.

As one of 15 award categories, the Woman Leader of the Year prize recognizes the successful careers of Filipino women who have contributed to the country’s economy and social status. Ms. Enriquez, as one of the awardees, also paid tribute to other women leaders.

“While it is a great recognition, at the end of the day, what is more important is not what the public thinks of me. What is more important to me is what the people who really work with me on a day-to-day basis, what they think of me and what I think of myself in relation to the standards that I have set for myself,” she said.

For women and any individuals looking to follow in her footsteps, Ms. Enriquez also had some advice.

“I wouldn’t exactly want to inspire everyone or every woman out there to follow in my footsteps because I am a product of the unique circumstances of my life. But what I would like to dare them to do is to define success in their own terms, and to be the best version they could ever be of themselves.”

Ms. Enriquez said that one of the biggest fallacies and myths women believe is that they can only be successful if they have a great career, or if they are a C-level executive, or if they are earning a certain amount of money. While that may be true for some people, that is not necessarily true for all.

“A mother who has raised very successful children, while being a housewife all her life, I think, is a very successful woman in her own right and a very successful leader in her own right. Every individual I would dare, especially women, to really think through and discern: How do I define success in my case? Define what success looks like for you, and aim for that. Work for that. Dare to be that.”

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