Variant that combines Delta and Omicron identified; dogs sniff out virus with high accuracy

March 10, 2022 | 3:35 pm

Coronavirus_SARS-CoV-2 — COMPUTER-GENERATED representation of COVID-19 virions via Felipe Esquivel Reed / CC BY-SA

The following is a summary of some recent studies on coronavirus disease 2019 (COVID-19). They include research that warrants further study to corroborate the findings and that has yet to be certified by peer review.

‘DELTACRON’ WITH GENES OF DELTA AND OMICRON FOUND
Hybrid versions of the coronavirus that combine genes from the Delta and Omicron variants — dubbed “Deltacron” — have been identified in at least 17 patients in the United States and Europe, researchers said.

Because there have been so few confirmed cases, it is too soon to know whether Deltacron infections will be very transmissible or cause severe disease, said Philippe Colson of IHU Mediterranee Infection in Marseille, France, lead author of a report posted on Tuesday on medRxiv ahead of peer review.

His team described three patients in France infected with a version of SARS-CoV-2 that combines the spike protein from an Omicron variant with the “body” of a Delta variant.

Another two unrelated Deltacron infections have been identified in the United States, according to an unpublished report by genetics research company Helix that has been submitted to medRxiv and seen by Reuters. On virus research bulletin boards, other teams have reported an additional 12 Deltacron infections in Europe since January — all with an Omicron spike and a Delta body.

Genetic recombinations of human coronaviruses have been known to happen when two variants infect the same host cell.

“During the SARS-CoV-2 pandemic, two or more variants have co-circulated during same periods of time and in same geographical areas… This created opportunities for recombination between these two variants,” said Mr. Colson, adding that his team has designed a PCR test that “can quickly test positive samples for the presence of this… virus.”

DOGS SNIFF OUT CORONAVIRUS WITH HIGH ACCURACY
New research adds to evidence that trained dogs could help screen crowds to identify people infected with the coronavirus.

At two community screening centers in Paris, 335 volunteers getting traditional PCR tests also provided sweat samples. Overall, 78 people with symptoms and 31 people without symptoms tested positive by PCR.

Given the sweat samples to smell, the dogs were 97% accurate at detecting the infected patients, and 100% accurate at detecting infection in the asymptomatic patients, according to a report posted on Tuesday on medRxiv ahead of peer review. They also were 91% accurate at identifying volunteers who were not infected, and 94% accurate at ruling out the infection in people without symptoms.

“Canine testing is non-invasive and provides immediate and reliable results,” the authors said. “Further studies will be focused on direct sniffing by dogs to evaluate sniffer dogs for mass pre-test in airports, harbors, railways stations, cultural activities or sporting events.”

Future variants-of-concern likely lurk in today’s patients

The many coronavirus particles inside an infected person likely include some mutated ones that may turn out to be early examples of important variants, new findings suggest.

Closely analyzing virus particles obtained from 10 people with infections attributed to the Alpha variant in Spain in April 2021, researchers identified some mutated particles resembling the Omicron variant, which was not formally identified until seven months later. They also found mutations characteristic of a form of Delta and Iota, according to a report published on Tuesday in the Journal of Clinical Investigation.

While identifying an individual patient’s dominant variant may be sufficient for diagnostic purposes, the “ultra deep” genetic sequencing used in this study could help scientists track mutations in SARS-CoV-2 particles that might evolve into variants of concern, the researchers said.

“The virus that replicates in each infected patient is in reality a mixture of slightly different SARS-CoV-2 viruses,” and these different viruses account for varying proportions of the full “ensemble,” said coauthor Celia Perales of Universidad Autonoma de Madrid. Minority variants in one infected individual can become dominant in someone else, either by chance, or due to a selective advantage related to the presence or absence of drugs, vaccines, or other factors, she said. — Nancy Lapid/Reuters

South Korea elects conservative outsider as president in tectonic shift

March 10, 2022 | 3:08 pm

Korea-President-elected-Yoon-Suk-Yeol — Republic of Korea president-elect Yoon Suk-yeol. Image via Korean Ministry of Culture, Sports and Tourism/Korean Culture and Information

SEOUL — Conservative South Korean opposition candidate Yoon Suk-yeol rode to victory in a tight presidential election on a wave of discontent over economic policy, scandals and gender wars, reshaping the political future of Asia’s fourth-largest economy.

His victory in Wednesday’s bitterly fought election marks a stunning turnaround for the main conservative bloc, now known as the People Power Party, which has regrouped since the 2017 snap election after the impeachment and ouster of then President Park Geun-hye.

Mr. Yoon is a former prosecutor-general involved with Park’s case who fell out with outgoing President Moon Jae-in after being appointed by him, gaining notoriety for his investigations of top presidential aides.

“The people put me here with hope in my conviction that I have not yielded to any power for fairness and justice for 26 years,” Mr. Yoon said in a speech of his career as a prosecutor.

Mr. Yoon has pledged to stamp out graft, foster justice, and create a more level economic playing field, while seeking a “reset” with China and a tougher stance towards reclusive North Korea, which has launched a record number of missile tests in recent months.

He faces the challenge of uniting a country of 52 million riven by gender and generational divisions, growing inequality and surging home prices.

“Real estate prices, housing policy, jobs, and tax policies will top his domestic agenda,” said Duyeon Kim, a Seoul-based expert with the Center for a New American Security.

Mr. Yoon will need to restore public trust in Korea’s institutions and is likely to conduct major “housecleaning” by following through on a campaign pledge to investigate Mr. Moon’s administration for corruption, she added.

Official results showed Mr. Yoon, 61, edged out the ruling center-left Democratic Party’s Lee Jae-myung to replace Moon, whose single five-year term ends in May.

Mr. Yoon’s lack of elected political experience was seen as both a liability and an asset.

While his campaign was marked by gaffes and controversy, the race became a referendum on Mr. Moon’s economic policies from jobs to housing to wealth inequality.

The benchmark KOSPI rose more than 2%, its sharpest daily rise in at least three months, with Mr. Yoon expected to speed deregulation in South Korea’s capital markets.

The election was one of the closest in recent history and came after an unusually bitter campaign marred by scandals and smears. Both candidates’ disapproval ratings matched their popularity as scandals, mud-slinging and gaffes dominated what was dubbed the “unlikeable election.”

CONFRONTING CRISIS
Mr. Lee’s loss casts doubt on Mr. Moon’s legacy, including his signature efforts to engage with North Korea, which have largely been stalled since talks fell apart in 2019.

The new president will likely face an almost immediate crisis with Pyongyang, which appears to be preparing to launch a spy satellite and has suggested it could resume testing of long-range intercontinental ballistic missiles or nuclear weapons for the first time since 2017.

Mr. Yoon has vowed to forge even closer ties with the United States — South Korea’s only treaty ally — in the face of increased missile activity by North Korea and competition with China, which is the South’s largest trading partner.

The White House congratulated Mr. Yoon, saying President Joseph R. Biden, Jr., looked forward to working closely with him to bolster the alliance.

Messrs. Yoon and Biden spoke by telephone on Thursday, the White House later added.

“We can expect the alliance to run more smoothly and be in sync for the most part on North Korea, China, and regional and global issues,” said Mr. Kim from the Center for a New American Security.

Japanese Prime Minister Fumio Kishida welcomed Mr. Yoon’s win, and said he hoped to work closely with him to rebuild healthier ties with its neighbor amid tensions over historic and economic disputes dating to Japan’s 1910-1945 occupation of Korea.

More than 77% of South Korea’s 44 million eligible voters cast ballots to pick their next leader, despite a record surge in new coronavirus disease 2019 (COVID-19) cases this week.

Mr. Yoon said he would work with opposition parties to heal polarized politics and foster unity.

“Our competition is over for now,” he said in an acceptance speech, thanking and consoling Mr. Lee and other rivals. “We have to join hands and unite into one for the people and the country.”

At a separate ceremony with supporters, Mr. Yoon said he would put top priority on “national unity,” adding all people should be treated equally regardless of their regional, political and socioeconomic differences.

Mr. Lee had conceded defeat and congratulated his opponent.

“I did my best, but failed to live up to your expectations,” he told a news conference, blaming his “shortcomings”. — Josh Smith and Hyonhee Shin/Reuters

ECB seeks to reconcile soaring inflation with war risks

March 10, 2022 | 2:35 pm

FRANKFURT — The European Central Bank (ECB) is likely to make as few policy commitments as possible on Thursday as the shock of Russia’s invasion of Ukraine up-ends its expectations for the economy and leaves policymakers grappling with new realities.

With inflation in the euro zone at a record high even before Moscow began its assault on Feb. 24, policymakers had been expected to announce an end to years of money-printing stimulus, opening the way for an interest rate hike late this year.

But the war has shattered that consensus and the 25-member ECB Governing Council will go into the meeting divided, raising the chances of a policy surprise — and the risk of an error.

“No one can seriously expect the ECB to start normalizing monetary policy at such a moment of high uncertainty,” ING economist Carsten Brzeski said.

The safest route would appear to be for the bank to confirm an earlier decision to continue reducing bond purchases next quarter while leaving all other commitments, including an end-date for the buys and the timing of a rate hike, up in the air.

“We believe the ECB will aim to buy some time by proceeding with the previously planned gradual tapering in April … while increasing flexibility in the forward guidance to allow more room to act once the immediate fog lifts,” Societe Generale economist Anatoli Annenkov said.

“As long as we avoid recession, which is our current baseline, we expect the ECB to conclude later this spring that the policy stance will need to tighten faster to stabilize inflation expectations.”

Inflation across the 19 countries that use the euro could be three times the ECB’s 2% target this year and is likely to remain elevated next year, too.

A rebound in economic growth and the tightest labor market in decades should also be pushing the ECB to abandon its ultra-easy policy stance and end a nearly decade-long experiment with unconventional stimulus.

The Federal Reserve is sticking to its plans to raise US interest rates next week, heralding a string of increases to borrowing costs as inflation rises.

But the conflict in Ukraine, the unprecedented sanctions slapped by Western countries on Russia and soaring commodity prices will all raise uncertainty, dampen growth, and sap households’ purchasing power, adding to the case for caution.

Some policy hawks are nevertheless likely to push the ECB to curb stimulus and return policy at least to a “neutral” setting, so the bank could signal the end of bond buys in the coming months, a decision that would raise the chances of — but not cement — a 2022 rate hike.

The bank is also expected to drop any reference to a rate cut in its guidance, and may remove a stipulation that a rate hike would come “shortly” after bond purchases end.

STRUCTURAL WORRIES
Even if Thursday sees the can kicked down the road, high inflation makes the removal of stimulus almost unavoidable, but the real issue is how a changed world order will impact prices further out, a time horizon more relevant for the ECB.

High energy prices will lower growth and could be a drag on inflation in the longer term as families have less to spend on other items and firms postpone investments.

This is why the ECB’s inflation projection for 2024 is unlikely to be wildly different from the 1.8% it predicted three months ago.

These forecasts have been so unreliable in recent months that policymakers are now openly questioning them, making them less relevant in decision-making.

War in Ukraine is also likely to set in motion economic forces that could boost prices further out.

Increased defense spending, as outlined by several euro zone members, and a quicker green transition to wean the bloc off Russian gas are both likely to boost government spending and inflation.

These may also be backed by joint European Union debt issuance, and the bloc would be likely look to the ECB to keep its cost of borrowing down.

It is next to impossible to quantify the inflation costs of these long term decisions, however, so ECB projections will not reflect them, even if policymakers are likely to raise them in the debate. — Balazs Koranyi and Francesco Canepa/Reuters

Ukraine prepares potential move of sensitive data to another country — official

March 10, 2022 | 2:03 pm

The Ukrainian government is preparing for the potential need to move its data and servers abroad if Russia’s invading forces push deeper into the country, a senior cybersecurity official told Reuters on Wednesday.

Victor Zhora, the deputy chief of Ukraine’s State Service of Special Communications and Information Protection, emphasized his department was planning for a contingency, but that it is being considered at all suggests Ukrainians want to be ready for any Russian threat to seize sensitive government documents.

“We are preparing the ground,” Mr. Zhora said. Plan A was to protect IT infrastructure within Ukraine. Removing it to another country would only be a “Plan B or C.”

The move could only happen after regulatory changes approved by Ukrainian lawmakers, Mr. Zhora said.

Government officials have already been shipping equipment and backups to more secure areas of Ukraine beyond the reach of Russian forces, who invaded on Feb. 24 and are laying siege to several cities.

Last month Mr. Zhora told Politico there were plans to move critical data out of the capital Kyiv should it be threatened, but preparations for potentially moving data abroad go a step further.

Ukraine has received offers to host data from a variety of countries, Mr. Zhora said, declining to identify them. For reasons of proximity “a European location will be preferred,” he said.

“There are a lot options,” he said. “All the proposals are highly welcome and worth considering.”

Mr. Zhora gave few details of how such a move might be executed, but he said past efforts to keep government data out of Russia’s grasp involved either the physical transport of servers and removable storage devices or the digital migration of data from one service or server to another.

PROTOCOL

Even if lawmakers agreed to lift the restriction on sending Ukrainian data abroad and a protocol for the removal of IT assets were established, it would not necessarily mean that all or even most of the government’s data or network equipment would immediately be sent out of the country, Mr. Zhora said.

Government agencies would have to decide on a case-by-case basis whether to keep their operations running inside the country or evacuate them.

What to do in wartime with piles of data gathered by governments became a topic of international concern following the Taliban’s lightning offensive in Afghanistan last August that took city after city as US and other foreign forces withdrew.

The Taliban conquest of Kabul meant that their forces were in a position to inherit sensitive data — such as payroll information for Afghan government employees and soldiers — which they could potentially mine for leads on how to arrest or eliminate domestic opponents.

Similar concerns are at play in Ukraine. Russia possessing Ukrainian government databases and intelligence files could be helpful if Russia wanted to control Ukraine.

Pavol Jakubec, a historian at Sweden’s University of Gothenburg, said Ukraine was not necessarily planning for a potential government in exile, usually a last resort.

“It may be that they want to forestall potential Russian efforts to block their operations, analogue and digital,” he said.

In 1940 Norway physically sent the bulk of its Foreign Ministry archives to the north of the country and then eventually to Britain as German forces invaded, Mr. Jakubec said.

Beyond trying to protect citizens under occupation, Ukrainian officials would want to deny Russian forces the opportunity to possess documents “which could otherwise be doctored by the enemy and used for propaganda purposes,” Mr. Jakubec said. — Raphael Satter and James Pearson/Reuters

Seven out of 10 Filipinos had more sex during the pandemic, says study

March 10, 2022 | 1:38 pm

FILIPINOS turned to intimacy and enjoyed a better sex life during the pandemic, according to a recent survey.

A 2021 wellness index by health maintenance organization PhilhealthCare, Inc. (PhilCare) found that 69.5% of 1,500 respondents, or 7 out of 10 adult Filipinos, said they had more sex during the coronavirus disease 2019 (COVID-19) pandemic than before.

They also shared being satisfied with their sexual partner, with 84.4% of married respondents and 94.3% of cohabitating respondents admitting to enjoying more sex.

“This interesting finding proves that something positive can really come out of lockdowns. With their protracted time together under one roof, couples can enjoy more opportunities to improve their relationship in terms of physical and emotional intimacy,” said PhilCare president and chief executive officer Joseph Agustin “Jaeger” L. Tanco.

He noted that these findings only prove the importance of promoting sexual health in the workplace, since the quality of conversations surrounding sex can “shape a person’s general view of what sex is and its effects on their physical and mental health.”

A January 2021 study at the Journal of Sexual Medicine found that reduced levels of anxiety and depression were found in sexually active people during lockdown. The study also used logistic models to determine that lack of sexual activity was associated with a significantly higher risk of developing anxiety and depression.

PhilCare added that the workplace can do its part in creating an inclusive culture where Filipino employees can be comfortable to discuss sex-related health concerns.

“Employers have the power to remove the stigma of discussing sex and help prevent societal problems such as sexual assault and harassment, unplanned pregnancies, and the spread of sexually transmitted infections,” said Mr. Tanco.

The organization suggested counseling support for employees who need advice on sexual health concerns and seminars and gender-sensitivity training which could correct misconceptions about sexual health and conduct.

The PhilCare Wellness Index was conducted via a nationwide telephone survey in September 2021, covering Metro Manila and 65 provinces. Most respondents are employees, with 64.5% working for private firms. — Brontë H. Lacsamana

Taiwan wants to be ‘full member’ of US Indo-Pacific Economic Framework

March 10, 2022 | 1:11 pm

02 lisanto-deCvIgBnPwo-unsplash — lisanto-unsplash

TAIPEI — A senior Taiwanese minister called on Wednesday for the island to be made a “full member” of the United States’ forthcoming Indo-Pacific Economic Framework, saying Taipei was a reliable partner and crucial part of the global supply chain.

Washington vowed last month to commit more diplomatic and security resources to the Indo-Pacific to push back against what it sees as China’s bid to create a regional sphere of influence and become the world’s most influential power.

The 12-page strategy overview reiterated US plans to launch an Indo-Pacific Economic Framework in early 2022, an initiative the administration hopes will at least partially fill a big gap in engagement with the region since 2017 when then-President Donald J. Trump quit a multinational trade framework.

Speaking to an online event organized by the Brookings Institution, a US think-tank, Taiwan’s chief trade negotiator John Deng said democratically governed Taiwan was a dependable and stable partner both politically and economically.

“Taiwan is very willing to support the US Indo-Pacific Economic Framework,” he said.

“I would like to urge the US government, and I hope all the audience participating in the seminar today can help us convey this message to the US government, that Taiwan would like to be a full member of this framework.”

Supply chain cooperation between Taiwan, a major semiconductor producer, and the United States was vital for both, Mr. Deng added.

China, which claims Taiwan as its own territory, has condemned the US Indo-Pacific push, saying Washington is creating “exclusive clubs.”

Any Taiwanese participation in the economic section would likely further strain Sino-US ties with Beijing angered by any shows of support from Washington for the island.

Asked about Mr. Deng’s remarks, a US administration official told Reuters the United States was engaging with Indo-Pacific partners as it was developing the framework, but didn’t currently have “membership” details to announce.

“That being said, the US is committed to deepening our trade and investment relationship with Taiwan,” the official said.

A senior US diplomat said last month his country had “no intention” of engaging with China in its Indo-Pacific Economic Framework.

Mr. Deng said China had been using subsidies and unfair trade practices to boost its economic power in recent years, something Beijing routinely denies.

“China’s political and military ambitions also let the world understand that they pose a threat to the world order,” he added. — Reuters

Twitter begins testing ‘Shops’ feature to grow e-commerce

March 10, 2022 | 12:33 pm

Twitter Shops — IMAGE VIA BLOG.TWITTER.COM

Twitter Inc. will experiment with allowing companies to showcase up to 50 products for sale on their profiles, the company said on Wednesday, part of an effort to gain a piece of the $45 billion US market for so-called social commerce.

Facebook and Instagram, which are owned by Meta Platforms Inc., have been leaders in social commerce, enabling merchants to set up virtual shops and sell products.

The beta test for Twitter Shops will be available for select business in the United States and will be visible to people using the Twitter iPhone app, the company said.

US wireless carrier Verizon, one of the test partners, featured iPhone cases and wireless chargers in its Twitter shop on Wednesday.

After viewing the product on Twitter, users are redirected to the merchant’s website for checkout.

The experiment expands on a previous feature Twitter began testing last year allowing brands to showcase up to five products at the top of their Twitter profiles.

The San Francisco-based company is also experimenting with live-streamed shopping, which lets people purchase clothing, accessories and other items while watching live videos from the brand about the products. — Sheila Dang/Reuters

Positive outlook for the Philippines at the Citigold Annual Client Event

March 10, 2022 | 11:00 am

Citi Philippines CEO Aftab Ahmed (1) — Citi Philippines CEO Aftab Ahmed

Fund managers are bullish about the prospects of the Philippines at the 2022 Citigold Annual Chinese New Year Market Outlook Webinar hosted by Citi.

The virtual event was hosted by Citicorp Financial Services and Insurance Brokerage Philippines Inc. (CFSI) President Ramon Melchor Tejero, with Citi Philippines CEO Aftab Ahmed welcoming the around 600 clients in attendance.

A brief client survey was conducted by Tejero at the start of the event. In the survey, 50 percent of respondents said they are invested in equities when asked of their current wealth portfolio bias. When asked two years into the pandemic how their investment appetite has changed, 49 percent said they are invested in income-generating assets (like dividend paying investment funds) other than fixed income securities or bonds. Finally, 56 percent view the upcoming presidential elections as the biggest concern in the current investment landscape.

Aftab kicked off the evening on a very positive note, “The pandemic has posed challenges for the past two years and while it has taken a toll on business and economic activity, the economy as well as many businesses have remained resilient. This is substantiated by the fact that the macroeconomic indicators for the country have remained strong and the country’s ratings have remained unchanged. OFW remittances continue to support spending by consumers and the BPO sector is expected to continue growing. We are highly confident that the economy will continue to move on to an even stronger footing this year and that business activity will continue to increase.”

He also thanked Citigold clients for their continued support, “We would like to assure you that we will remain highly focused on delivering relevant financial solutions to address your banking needs and wealth management priorities.”

The event’s featured speakers echoed the positive sentiment.

BPI Investment Management Inc. president and chief investment officer Roberto Martin Enrile said in the equities market, the Philippine Stock Exchange index (PSEi) is seen hitting 8,600 this year, driven by the 27 percent growth in the sector weighted earnings on top of the trending 38 to 39 percent earnings per share (EPS) growth seen in 2021

The forecast was formulated late last year prior to the recent resurgence of COVID-19 infections due to the more contagious Omicron variant.

Leading the pack, Enrile explained, is the property sector with a more than 40 percent growth as mobility increases and demand for office space resumes, followed by conglomerates and banks due to impending rate hikes as well as better net interest margins.

Christopher Wong, client portfolio strategist for Southeast Asia at Fidelity International, said inflation has been getting investors’ attention in the past couple of months as the global economy continues to battle the spread of the Omicron variant.

Wong added that inflation has risen quite sharply over the last few quarters due to supply chain disruptions which are likely to normalize over the short term as well as rising wages, increasing housing costs and prices especially in the US, and climate change policies.

For his part, BlackRock director and product strategist Fred Wood said that the Omicron variant could be the start of the end of the COVID pandemic as high transmission rate drive population immunity but also with lower severity.

Wood said healthcare stocks would continue to do well as the number of people over the age of 80 is seen to increase to 290 million by 2050 from the current 140 million. On top of the healthcare sector, Wood is also positive on the sustainable energy theme particularly in the areas of clean energy, energy efficiency, and clean transportation.

Economists and analysts have penned a rosy outlook for the Philippines as it continues to recover from the impact of the global health crisis by accelerate the rollout of COVID-19 vaccines leading to the further reopening of the economy.

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ACG is geared to helping CEOs and business owners through the Executive Tax Management Program

March 10, 2022 | 10:30 am

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BSP seen to raise rates before midyear

March 10, 2022 | 12:33 am

By Jenina P. Ibañez, Senior Reporter

THE PHILIPPINE central bank may start raising its benchmark interest rates before mid-2022 to quell inflation risks caused by the Russia-Ukraine crisis, analysts said.

After easing to 3% in February, inflation in the Philippines could be affected by rising oil prices and natural disasters like typhoons, CLSA Senior Economist Anthony Nafte said at a briefing on Wednesday.

“Inflation is very volatile in the Philippines. I’m expecting a spike over the coming months to anywhere between 5.5% and 6%. That’s doubling the current inflation at 3%,” he said.

“Among emerging ASEAN (Association of Southeast Asian Nations) economies, the Philippines will be the highest risk of raising interest rates before the middle of the year.”

Mr. Nafte expects a 25-basis-point (bp) increase before mid-2022, and then another 50-bp hike in the second half of the year.

The Philippine economy would likely be “collateral damage” to the Russia-Ukraine crisis, raising prices in several sectors and pushing up inflation, Finance Secretary Carlos G. Dominguez III said on Monday evening.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno earlier said the war between Russia and Ukraine and its impact on international oil prices would continue to spill over to local costs. This could cause inflation to again exceed the central bank’s target of 2% to 4% this year, he said.

Mr. Diokno previously said the BSP would remain accommodative and wait for four to six straight quarters of economic growth before considering a rate hike. The central bank, however, said it was ready to act in case there is a need to respond to second-round effects of inflation.

Central banks in Southeast Asia have not yet raised rates, although Singapore has started tightening its monetary policy through its exchange rate settings.

Mr. Nafte said the Philippines is still expected to be an economic outperformer in ASEAN because it is a domestically driven economy, making it less vulnerable to export disruptions.

“We’re looking for a consumption spike in the second quarter. Traditionally, there’s this huge amount of pre-election spending,” he said, referring to the campaign season before the May 9 elections.

Declining coronavirus cases and improving vaccinations are also driving more mobility, Mr. Nafte added.

While there are investment uncertainties due to the upcoming elections, he said the economic recovery would be boosted if the next administration continues the government’s flagship infrastructure program.

Emerging markets like the Philippines could also relatively perform well amid the crisis because it is less vulnerable to liquidity shocks, Manulife Investment Management said in a note.

“It’s also likely that global export momentum slows somewhat, and so those economies less reliant on foreign demand may enjoy a mild relative advantage.”

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa expects the central bank to consider hiking rates by the second quarter as inflation accelerates.

Inflation would likely come in at 5.2%, breaching the central bank’s target as early as the second quarter, due to the depreciating peso and higher energy prices, he said via Viber.

“Despite dovish undertones from (Mr.) Diokno, BSP may be backed into a corner by May with soaring commodity prices and a weaker currency,” he said.

House Ways and Means Chairperson and Albay Rep. Jose Maria Clemente S. Salceda said the continued rise of pump prices could push inflation higher.

“This could drive overall inflation to as high as 5.2 to 5.4% by June, considering added pressures on bread (Russia and Ukraine are among the world’s largest producers of wheat), typical power demand surges during the summer months, and second-round effects of oil prices on transport costs, electricity, food (especially fish), and other basic commodities,” he said in a statement.

Higher interest rates are needed before the middle of the year to manage inflation if petroleum prices continue to surge, University of Asia and the Pacific Senior Economist Cid L. Terosa said

“I’m less optimistic that the pace of the rise in prices of petroleum products this month will slow down drastically,” he said in an e-mail. “If prices fall, the pace would be slower than the speed it has risen for the past few weeks. I believe inflationary risks will intensify.”

Local gasoline, diesel and kerosene prices rose for the 10^th straight week on Tuesday by P3.60, P5.85, and P4.10 per liter, respectively. World oil prices hit multi-year highs in the past few days due to supply concerns.

‘MOST VULNERABLE’
S&P Global Ratings on Wednesday warned central banks in the region should deal with inflation risks from the Russia-Ukraine crisis, alongside the impact of the looming rate hikes by the US Federal Reserve.

“Higher consumer price index inflation would strain monetary policy in India, Korea, the Philippines, Singapore, and New Zealand, where CPI (consumer price index) inflation is preoccupying central banks,” it said in a note.

S&P said the Philippines is one of the Asia-Pacific economies that is most vulnerable to the oil price spike triggered by Russia’s invasion of Ukraine.

The debt watcher warned that the war’s impact on prices and financial markets could hit growth prospects in the region, as consumer and business confidence is dampened.

“For the many economies in Asia-Pacific that are net energy importers, higher energy prices can trigger a terms-of-trade shock,” S&P said.

“This would hit current account balances and real domestic consumption and investment. This dynamics would be most keenly felt by the largest net energy importers (relative to gross domestic product): India, the Philippines, Korea, Taiwan, and Thailand,” it added.

S&P also said substantially higher energy prices and volatility could weaken currencies and asset markets in Asia-Pacific countries.

“This pressure will be strongest where higher energy prices pressure inflation targets — such as India, the Philippines, Korea, and Thailand. Or it could cause sizable current account deficits — in India, the Philippines, and Thailand,” according to the report.

The peso closed at P52.23 on Wednesday, the third straight day it finished at a P52-per-dollar level, amid safe-haven demand for the greenback.

In December, S&P said it expected the Philippine economy to grow by 7.4% in 2022, which is well within the 7-9% target set by economic managers. — with Luz Wendy T. Noble

Manufacturing growth slows down in January

March 10, 2022 | 12:32 am

By Ana Olivia A. Tirona, Researcher

FACTORY OUTPUT GROWTH slowed for a second straight month in January, amid the reimposition of tighter mobility curbs due to the Omicron-driven surge in coronavirus cases.

Preliminary data from the Philippine Statistics Authority’s (PSA) Monthly Integrated Survey of Selected Industries (MISSI) showed manufacturing, as measured by the volume of production index (VoPI) grew by 16.5% year on year in January.

This was slower than December’s revised 21.3% growth but a turnaround from the 14.5% contraction recorded in January 2021.

This was the second straight month the VoPI recorded slower growth. It also marked the 10^th consecutive month that factory output posted a positive reading.

“This slowdown is mainly due to the Omicron surge last January when the government declared more restrictions and dampening the momentum of manufacturing growth in December,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

Metro Manila and other areas of the country were placed under a stricter Alert Level 3 in January, as the more contagious Omicron variant pushed daily infections to record levels.

“Manufacturing is leaning towards recovery despite a slower growth, compared with January 2021,” Federation of Philippine Industries (FPI) Chairman Jesus L. Arranza said in a Viber call. “But due to the Omicron variant, which spreads faster than previous variants, it led to the surge in cases.”

Sixteen of 22 industry divisions posted VoPI growth in January, led by tobacco products, which rose by 88.4% annually from a 14.5% contraction in December. This was followed by wood, bamboo, cane, rattan articles, and related products, which grew by 86.8%; and basic pharmaceutical products and pharmaceutical preparations, which was up by 47.8%.

Meanwhile, bigger declines were recorded for the manufacture of wearing apparel (-24.2% from -0.4%), followed by leather and related products, including footwear (-6.3% from 0.5%); and chemical and chemical products (-2.3% from 31.5%).

Market watchers expected this slowdown in January as it was signaled by the manufacturing purchasing managers’ index (PMI) data for that month, Mr. Asuncion said.

The country’s manufacturing PMI ended four consecutive months of growth after registering a score of 50 in January, which signified no change in manufacturing conditions from the previous month. The 50 reading separates manufacturing expansion from contraction.

The capacity utilization — the extent to which industry resources are used in producing goods — averaged 67.9% in January, faster than the revised 67.4% in the previous month. Of the 22 sectors, 20 averaged a capacity use rate of at least 50%.

Both analysts expect a steady recovery for manufacturing in February and March as most parts of the country shifted to a more relaxed Alert Level 1. However, they warned about the impact of Russia’s invasion of Ukraine, especially the surge in global oil prices.

The capital region and surrounding areas were downgraded to Alert Level 2 in February, and to the most relaxed Alert Level 1 starting March.

“The risks brought about by the uncertainties due to the Ukraine-Russia conflict may rear its ugly head and we may see a slight slowdown in manufacturing demand growth,” Mr. Asuncion said.

“I think manufacturing will post a steady growth in the coming month (February) as occupancy is nearing 100%,” Mr. Arranza said.

“Looking further, I don’t think the spike in oil and fuel prices will have a huge effect on manufacturing as it’s more on the logistics side, but pacing might become slower,” he added.

Banks miss 2021 lending quota for agri and agrarian reform sectors

March 10, 2022 | 12:31 am

rice-palay-harvest — PHOTO BY CINDY S. REYES, DEPARTMENT OF AGRICULTURE - PHILIPPINE RICE RESEARCH INSTITUTE

PHILIPPINE BANKS failed to comply with the minimum required lending for the agriculture and agrarian reform (agri-agra) sectors in 2021, according to the central bank.

Lenders disbursed loans worth P851.76 billion as of end-December to these sectors, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

This is below the minimum required credit allocation of P1.997 trillion against their total loanable funds worth P7.992 trillion.

Under Republic Act No. 10000 or the Agri-Agra Reform Credit Act of 2009, banks must allocate 10% of their total loanable funds for the agrarian reform sector and 15% for agriculture.

Credit extended to the agriculture sector reached P776.436 billion in 2021, equivalent to only 9.71% of their total loanable funds.

Big, thrift and rural banks financed loans to the agriculture sector amounting to P740.281 billion, P18.141 billion, and P18.014 billion, respectively.

On the other hand, lending to the agrarian reform sector stood at P75.319 billion, or 0.94% of their total loanable funds.

Credit extended by big, thrift, and rural banks hit P61.584 billion, P3.194 billion, and P10.541 billion, respectively, — all below the 10% minimum requirement.

The BSP hopes that Congress, which is on a break for the elections, will prioritize changes to the Agri-Agra law.

A Bicameral Conference Committee will still need to reconcile any conflicting provisions of the measures approved by the House of Representatives and Senate.

Once signed into law, the amendments will widen the range of credit counted as part of the quota to include the larger production chain process in the agriculture sector.

MSME LOANS
Banks also failed to meet the quota for small business loans required by law, a separate BSP data showed.

Loans extended by the Philippine banking industry amounted to P463.134 billion, equivalent to 5.41% of their total loan portfolio of P8.57 trillion.

This is lower than the 10% required allocation for small businesses under Republic Act No. 6977. The law mandates lenders to allocate 8% and 2% of their portfolios to micro and small enterprises (MSEs) and medium-sized enterprises, respectively.

Year on year, the amount of loans to small businesses increased by 6.3%.

MSE loans extended by banks amounted to P178.143 billion, which is only 2.08% of their total loan portfolio and much lower than the 8% minimum requirement for the sector.

On the other hand, credit to medium enterprises stood at P284.991 billion, equivalent to 3.33% of their portfolio and fulfilling the 2% quota.

Banks have long opted to incur penalties for noncompliance instead of taking on the risks associated with lending to small businesses.

To encourage lending to small businesses, the BSP in 2020 allowed banks to count MSME loans as alternative reserve compliance. These borrowings were also given reduced credit risk weight. — Luz Wendy T. Noble

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