Facebook Instagram Linkedin Twitter Youtube
Home Blog Page 8977

PAL, Cebu Pacific, 2Go cancel trips until April 30

Flag carrier Philippine Airlines (PAL), budget airline Cebu Pacific, and shipping and logistics provider 2Go Group Inc. (2Go) have canceled their passenger trips up to April 30.

Their announcements came after the government declared on Tuesday the extension of the lockdown on Luzon island until the end of April, as the country has yet to contain the spread of the coronavirus disease 2019 (COVID-19). 

As of Tuesday, the Department of Health reported a total number of COVID-19 infections at 3,764, with 177 deaths and 84 recoveries.

PAL, operated by PAL Holdings, Inc., said in an advisory late Tuesday: “We confirm that all Philippine Airlines domestic and international flights are canceled up to April 30, 2020, in line with the extension of the Luzon Enhanced Community Quarantine until April 30.”

The flag carrier said it intends to resume its flights by May 1 “if allowed by government authorities, global public health conditions and the travel environment.”

Cebu Pacific, operated by Cebu Air, Inc., said in a statement on Wednesday that its flights will remain suspended from April 15 to April 30.

2Go Group also canceled all its voyages from March 17 to April 30. — Arjay L. Balinbin

Global Ferronickel suspends Surigao del Norte mining

The operating arm of Global Ferronickel Holdings, Inc. (FNI) has temporarily suspended its mining operations in Surigao del Norte, amid the coronavirus disease 2019 (COVID-19) pandemic.

In a disclosure on Wednesday, Platinum Group Metals Corp. (PGMC) has halted its operations located at Barangay Cagdianao in the Municipality of Claver.

This is in accordance with the requests of Surigao del Norte governor Francisco T. Matugas and Claver Mayor Georgia D. Gokiangkee to cease mining operations.

The temporary suspension is in compliance with the policy directions being implemented by the local government units.

“As a good corporate citizen, we comply with all rules and regulations, and as a good neighbor, we listen to the concerns of the local community,” FNI President Dante R. Bravo said.

PGMC will continue to observe quarantine and sanitation procedures, as the company will maintain a skeleton staff for its site maintenance and relief operations.

The mining company initially earmarked P10 million for relief assistance to the impact and non-impact communities from the 14 barangays in Claver.

“We also stand together with the Surigaonon people and the whole country in the fight against this pandemic,” Mr. Bravo said.

PGMC has since distributed relief goods, disinfectants, face masks, meals, and other essential items to 10,995 people. — Revin Mikhael D. Ochave

DoTr partners with Cleanfuel, Total for medical workers’ free ride

The Transportation department has partnered with Cleanfuel and Total Philippines Corp. to carry out the government’s fuel subsidy program for bus companies involved in the free bus service program for medical workers battling the coronavirus disease 2019 (COVID-19) pandemic.

In a statement, the Department of Transportation (DoTr) said  Cleanfuel (Shaw Autogas, Inc.) will provide 40 liters of fuel for 20 bus units starting April 8 until April 30, 2020.

“These will be given at the Cleanfuel Kamias and Biñan branches,” the DoTr said.

“Total will provide free fuel to 30 participating bus units (P1,000/unit), or vehicles of medical frontliners (P300/unit), upon station opening,” it added.

It said Total started providing free fuel on April 3, and will continue until April 17, 2020.

“Ito ay malaking tulong para makasiguro tayong tuluy-tuloy ang ating serbisyo upang makatulong sa ating mga health workers. Malaking bagay ho ito sa mga modernong bayani nating nagsasakripisyo para sa ating mga kababayan. Sa Total Philippines at Cleanfuel, taos-puso po ang aming pasasalamat,” DoTr Secretary Arthur P. Tugade said.

(This is a big help to ensure the continuous service to our health workers, our modern heroes. I sincerely thank Total Philippines and Cleanfuel.)

DoTr has also partnered with Phoenix Petroleum Philippines to implement the fuel subsidy program. — Arjay L. Balinbin

ATI’s cruise terminal to be used as quarantine site

Listed port operator Asian Terminals, Inc. (ATI) said its international cruise terminal at the Manila South Harbor is going to be used as a temporary quarantine area to aid the government in its fight against the coronavirus disease 2019 (COVID-19) pandemic.

In a statement on Wednesday, ATI said it was making available its Passenger Terminal Building (PTB) and adjacent berthing facilities as added temporary quarantine areas in response to government’s call for solidarity, particularly in mobilizing interim healthcare facilities needed amid the national health crisis.

“The PTB with 2,000-seating capacity will be converted into a temporary holding facility while Pier 15’s two southside berths will accommodate the floating hospital vessels being deployed by the Department of Transportation (DoTr),” it added.

It said government agencies, including the DoTr and the Department of Public Works and Highways (DPWH), are leading the conversion of the terminal.

“ATI units originally located at the cruise terminal, such as the General Stevedoring, Billing and Collections and Medical Office, will be transferred to the South Harbor Operations Center (SHOC) to ensure seamless operations,” the company also said.

The DoTr announced recently that shipping and logistics provider 2Go Group, Inc. would convert two of its vessels into “quarantine ships” for returning seafarers and other overseas Filipino workers (OFWs).

The department said more shipping companies have expressed their intention to join the initiative.

President Rodrigo R. Duterte signed into law on March 24 Republic Act No. 11469, or the Bayanihan to Heal as One Act, authorizing him to exercise powers “necessary and proper” to fight the spread of the COVID-19.

The law states that “when the public interest so requires,” the President can direct the operation of privately owned hospitals and medical and health facilities including passenger vessels and other establishments to house health workers; serve as quarantine areas or centers; and public transportation to ferry health, emergency, and frontline personnel and other persons; among others.

On Tuesday, the government announced the extension of the lockdown on Luzon island until the end of April, as the country has yet to contain the spread of the COVID-19. — Arjay L. Balinbin

Trade gap narrows in February on weaker imports

THE country’s trade-in-goods deficit narrowed in February as imports declined while exports grew, the Philippine Statistics Authority (PSA) reported on Wednesday.

Import payments declined 11.6% year on year to $7.057 billion in February, accelerating from the 2.8% contraction in January and a turnaround from the 2.9% growth in February 2019.

The latest reading marked the 10th consecutive month of decline for import goods since May 2019, according to revised PSA estimates.

To date, the merchandise import bill contracted by 6.8% to $16.350 billion from $17.550 billion in 2019’s comparable two months. This remained below the eight percent target set by the Development Budget Coordination Committee (DBCC) for 2020.

Meanwhile, the value of merchandise exports grew 2.8% annually to $5.401 billion in February from $5.252 billion a year ago. This was slower than the 9.4% growth in January but faster than the marginal 0.5% growth last year.

Export receipts were up 6.1% to $11.189 billion from $10.545 billion on a cumulative basis against the DBCC’s four percent target set for the year.

The trade balance figured in a deficit of $1.656 billion in February compared to a $2.733-billion trade gap in the same month in 2019. Cumulatively, the trade deficit reached $5.160 billion, smaller than the $7.006-billion gap in January-February 2019.

In an e-mail to reporters, ING Bank N.V.-Manila Branch Senior Economist Nicholas Antonio T. Mapa said the latest trade report “highlights the continued fade in investment activity” in February that is “likely linked” to concerns about the then initial spread of the coronavirus disease 2019 (COVID-19).

Capital goods, which made up around 32.7% of the country’s total imported goods, registered the biggest year-on-year decline among commodity groups at 16.2% to $2.306 billion.

Imports of mineral fuels, lubricant and related materials fell by 12% to $834.706 million, followed by those of consumer goods (-9.5% to $1.194 billion) and raw materials and intermediate goods (-8.7% to $2.660 billion).

Meanwhile, exports of manufactured goods — which accounted for 81.4% of the total export sales in February — increased by 1.3% to $4.395 billion.

Electronic products, which made up around 54.2% of total merchandise exports in February, grew by 3.4% year on year to $2.929 billion. Semiconductors, which accounted for 74.5% of electronics, rose seven percent to $2.182 billion.

Exports of agro-based products jumped 29.2% year on year to $429.014 million in February. Likewise, overseas sales of mineral and petroleum products were up by 5.3% (to $418.026 million) and 133.5% (to $38.123 million), respectively.

On the other hand, exports of forest products declined by 13.2% to $24.980 million.

“Exports managed to gain mainly due to base effects, driven mainly by the powerhouse electronics subsector which accounts for the bulk of our export portfolio,” ING’s Mr. Mapa said.

PROSPECTS FOR TRADE

Economists expect the country’s exports and imports to drag in the near term amid the supply chain disruptions and sluggish external demand caused by COVID-19, as well as the government’s decision to extend the lockdown on Luzon island until April 30.

“In the near term, we can expect a reversal in export trends (demand for electronics will likely fall), but a continued contraction for imports as investment activity remains dormant (weaker capital and raw material imports), crude oil prices tank and consumer imports weaken further on depressed demand outside basic goods,” Mr. Mapa said.

The economist added that the enhanced community quarantine implemented in Luzon for another two weeks “will likely keep the trade deficit in the $2-billion range” on account of supply chain bottlenecks that kept demand for exports and imports constrained, as well as the global economy “headed for a likely recession.”

“In the near term, the ‘improving’ trade balance should be supportive to the peso but it is yet another ‘symptom’ (after faster inflation yesterday) pointing to economic malaise down the line. We’re in the incubation phase with the impending economic challenge set to hit us in the coming months,” Mr. Mapa said.

For University of Asia and the Pacific economist and former Tariff commissioner George N. Manzano, the trade situation “would definitely worsen” once the Luzon quarantine is taken into account.

“There would be an impact in the ports in which big chunks of manufacturing come from Luzon. The full extent and impact of the lockdown in trade will be manifested in March and subsequent months,” he said in a phone interview.

In a statement, the National Economic and Development Authority (NEDA) called for the government to “intensify” trade sector reforms.

“The public health emergency we are experiencing emphasizes the need to fast-track reforms to facilitate trade by reducing transaction costs. We must be creative in finding ways to ease the movement of goods and services while we continue to implement measures to combat COVID-19,” Socioeconomic Planning Secretary Ernesto M. Pernia was quoted in the NEDA statement as saying.

“We must aggressively pursue and prioritize the digitization of import and export documents, with the institutionalization of the TradeNet system as well as the utilization of cashless payments for all government services,” he said.

Aside from allowing the payment extension of rent, bills, and utilities, Mr. Pernia said the government can also help firms through a “temporary reprieve of demurrage and customs fees or waving of navigational charges” for the heavily hit airline industry.

“The country’s experience in responding to the COVID-19 pandemic has brought home the crucial importance of synergy of efforts of the government, private sector and citizens. Such cooperation in making limited resources work should be part of the new normal that will emerge after this pandemic,” Mr. Pernia said. — JEH

PHL’s virus response hits over P1 trillion so far

By Beatrice M. Laforga, Reporter

THE Philippine government has set aside $23 billion (P1.165 trillion) so far for its battle against the coronavirus disease 2019 (COVID-19) pandemic, but Finance Secretary Carlos G. Dominguez III said they have “a lot of headroom” to spend more.

On Wednesday, the Finance chief said the economy will likely post flat growth or even shrink by as much as 0.8% this year, as economic activities in Luzon remain at a standstill due to the Luzon-wide enhanced community quarantine that will last until April 30.

He said $6 billion (P304 billion) has already been allotted to assist the “most vulnerable” sectors, while the bulk of the funds, $16.4 billion (P830.272 billion), will go to programs that will “support the economy.”

“To support the most vulnerable in our communities… We have allocated a total of $6 billion for that. We are then also allocating $650 million (P32.905 billion) to the frontliners and [to] supporting the battle against the virus. And finally, together with our monetary authorities, we have allocated $16.4 billion for support of the economy, so the total value is about $23 billion so far, or between five and six percent of the GDP,” he told CNBC.

To fund this, Mr. Dominguez said the government is negotiating $5.7 billion worth of loans from multilateral lenders including the World Bank, the Asian Development Bank and the Asian Infrastructure Investment Bank.

The Finance chief said the government might see its debt stock jump to at least 46% of GDP amid higher borrowings, from its record-low level of 41.5% in 2019.

“Our debt to GDP is only 41%. This is down from over, above 54% 10 years ago. So we have a lot of headroom. Right now, we probably will increase this debt-to-GDP ratio to slightly over 46% in view of this crisis,” he explained.

Under Republic Act No. 11469, or the Bayanihan to Heal as One Act, the President can realign budgetary allocations into COVID-19 efforts.

At least P100 billion in dividends from government-owned and -controlled corporations (GOCCs) will also be used, although Mr. Dominguez said the government can also tap commercial markets to plug the funding gap.

“Our original funding was really for two months. While we were not sure how long the COVID will last, we think the estimate would be until around the end of May. So we are ready until the end of May,” he said.

While there are no immediate plans to raise taxes, Mr. Dominguez said the government may consider new taxes “in a year or two.”

Meanwhile, the government may also seek the approval of Congress for a bigger budget this year, which is set at P4.1 trillion, as well as for 2021, which is initially programmed at P4.586 trillion.

“We will be putting together a comprehensive package, and it is likely that we will go to our Congress to seek a higher budget for the rest of the 2020 if needed, and most likely for 2021,” he said.

Currently, the economic team is assessing the impact of the lockdown and health crisis which will help them craft a “bounce back plan” for the economy. Mr. Dominguez said this will help them determine the aid they can provide to different sectors.

ZERO GROWTH

“We are projecting a zero to possibly 0.8% negative growth this year. Definitely businesses are impacted, especially businesses in the tourism sector, as well as the retail sector,” the Finance chief said.

The estimated 0.8% contraction in gross domestic product (GDP) is lower than -0.6% to 4.3% growth range by the National Economic and Development Authority (NEDA), prior to the extension of one-month lockdown until April 30.

NEDA last month said the low-end of its growth estimate for this year, a contraction of 0.6%, is “still too high” if the ECQ is extended beyond one month “or if the spread of COVID-19 is unabated even after the ECQ.”

Mr. Dominguez said the government’s tax collections will certainly be lower than the programmed P2.576 trillion, but assured that “these are things that we can finance.”

“Our economy has been growing steadily for the last 10 years at an average of 6.3%. Our revenues to GDP is highest since 23 years, it’s at 16.9% now. Our inflation rate is 2.5% and our debt to GDP is only 41.6%. Now we have a lot of room to maneuver here,” he said.

“The policies of the President have left us with ample fiscal headroom. And we are now responding very quickly to this coronavirus.”

ASSISTANCE

Nearly P10 billion worth of cash assistance will be given out to poor families in Metro Manila covered by the social amelioration program (SAP) this month, the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF-EID) said.

IATF spokesperson and Cabinet Secretary Karlo Alexei B. Nograles said the Department of Social Welfare and Development (DSWD) National Capital Region has already facilitated the disbursement of checks to be released for the month of April.

The cities that have received the checks are:
– Quezon City, P3.02 billion;
– Caloocan, P1.72 billion;
– Manila, P1.48 billion;
– Pasig, P750.93 million;
– Taguig, P739.97 million;
– Parañaque, P621.39 million;
– Marikina P449.88 million;
– Muntinlupa, P430.68 million; and
– Mandaluyong, P368.37 million.

Around 18 million families affected by the COVID-19 crisis will receive cash subsidies ranging from P5,000 to P8,000 a month, for April and May.

PROPOSED STIMULUS

Meanwhile, a legislator is proposing a P1-trillion stimulus package for the government to continue its “social and labor amelioration assistance and to provide a lifeline for distressed businesses.”

“In a telephone conversion today (April 8) with Secretary Ernesto (M.) Pernia of the National Economic Development Authority (NEDA), we agreed that not only micro, small and medium enterprises (MSMEs) need assistance but also major corporations like airlines, shipping, land transport, hotels, export firms, and manufacturers, among others, need lifelines to recover and stay afloat,” Albay Rep. Edcel C. Lagman said in a statement Wednesday.

He added that the package will include assistance to vulnerable families, displaced workers and households belonging to the middle class.

Mr. Lagman noted that the funding for the P1-trillion stimulus can be sourced from the following: monetization by the Bangko Sentral ng Pilipinas (BSP) for budget support of an allowable portion of the country’s foreign reserves; issuance of bonds by the Bureau of the Treasury (BTr); extension and expansion of the “Tax Amnesty Act” or Republic Act 11213; grant of tax credit or special tax discounts for advance tax payments; and sale of government assets.

Other sources of funds also include the advances of dividends due to the national government from GOCCs; additional contributions from the Philippine Amusement and Gaming Corp. (PAGCOR) and the Philippine Charity Sweepstakes Office (PCSO); savings from the 2019 and 2020 General Appropriations Acts (GAAs); and reduction in personal services (PS). — with Genshen L. Espedido and GMC

Business sentiment slumps amid pandemic

BUSINESS confidence slumped in the first quarter, amid economic disruptions caused by the Taal Volcano eruption and the coronavirus disease 2019 (COVID-19) pandemic, a survey by the Bangko Sentral ng Pilipinas (BSP) showed.

The BSP’s business expectation survey (BES) showed the overall confidence index (CI) declined to 22.3% in January to March, from 40.2% in the fourth quarter of 2019.

The reading is the lowest since the 22% recorded in the fourth quarter of 2009 amid the global financial crisis.

However, the survey, which was conducted from Jan. 24 to Mar. 13 among 1,533 firms, does yet not take into account the impact of the enhanced community quarantine (ECQ) in Luzon which started on Mar. 17.

In a statement, the BSP said companies attributed the weaker business sentiment in the first quarter to the impact of the COVID-19 pandemic, African Swine Fever (ASF) outbreak and the Taal Volcano eruption.

Businesses were also concerned over the termination of the Visiting Forces Agreement with the United States, non-renewal of mining rights and travel bans due to the COVID-19 outbreak.

The companies surveyed also cited the drop in orders and lower volume of business activity and production, seasonal slack in demand after the holiday season, and low supply of raw materials and products.

“Across different types of trading firms (i.e., exporter, importer, dual-activity and domestic-oriented), business sentiment was less favorable for Q1 2020, except for exporters whose outlook was more optimistic,” the central bank said in a statement on Wednesday.

“In particular, their sentiment on the volume of business activity was less upbeat across sectors, except for construction on these periods,” it added.

Across sectors, business optimism was “less upbeat” for the first quarter, except construction firms that expected a boost in projects as part of the government’s “Build, Build, Build” program.

OUTLOOK

Meanwhile, business confidence for the second quarter appears to be more upbeat as CI rose to 42.3% from 40.3% in the previous quarter. This was attributed to expectations of higher sales, mainly in the community, finance, business, and trade sub-sectors; uptick in demand during the summer months and harvest season; expansion; and higher infrastructure spending.

Business outlook on the economy weakened for the next 12 months, as the CI dropped to 55.8% from 59.6 percent in the previous quarter.

“The less optimistic outlook of the respondents for the next 12 months was attributed to expectations of (a) unfavorable effects of the Taal eruption and virus outbreak, and (b) concerns on government policies (i.e., rice tariffication law, imposition of price caps on certain medicines, and possible imposition of safeguard duties on imported vehicles),” the central bank said.

The survey also showed the employment outlook index remained steady for the second quarter, but lower in the next 12 months, “which suggests that more firms indicated to continue hiring new employees for Q2.”

Companies’ expansion plans are also higher in the second quarter, but are expected to drop in the next 12 months.

“Sentiment on financial conditions, which was already in negative territory, slipped further to -12.2% for Q1 2020 from -5.4% in the previous quarter, the lowest reading since Q1 2010. This means that firms that expect tight financial conditions increased and continued to outnumber those that said otherwise during the quarter,” the BSP said.

The survey also showed companies expect the peso to appreciate, interest rates to fall, but inflation rate to quicken for the current and next quarter.

“Respondents predicted inflation to be at 2.9% for Q1 2020, 3% for Q2 2020, and 3.2% for the next 12 months (which was unchanged compared to the previous quarter’s survey results). Moreover, businesses anticipated that the peso-dollar rate will average at P50.9/US$1 for Q1 2020, P51.1/US$1 for Q2 2020 and P51.2/US$1 for the next 12 months,” the central bank said.

March saw headline inflation slow further to 2.5% from 2.6% in February and 3.3% a year ago, preliminary PSA data showed on Tuesday — LWTN

Gov’t won’t dip into infrastructure budget, says needed to drive economy

FUNDS intended for the infrastructure program will be kept largely intact during the current emergency, as such spending will be needed to drive growth after the pandemic crisis ends, Cabinet Secretary Karlo Alexei B. Nograles said.

In a briefing Wednesday, Mr. Nograles said that the government has no intention of redirecting funds earmarked for its flagship program, known as “Build, Build, Build” amid doubts that the initial stimulus packages will be sufficient for the duration of the coronavirus disease 2019 (COVID-19) emergency.

“Malaking bahagi ng pag-jumpstart ng ekonomiya ang “Build, Build, Build.” ‘Yun po ang makaka-rev up ng ekonomiya natin (“Build, Build, Build” will play a big part in jumpstarting the economy. That program will rev it up),” Mr. Nograles said.

President Rodrigo R. Duterte said in a speech Monday that he wants the Finance department to generate more funds as the P270 billion worth of budget realignments identified for the Bayanihan to Heal as One Law is not enough to assist Filipinos in need.

The Philippines is expected by economic managers and analysts to enter into a mild recession due to the pandemic after economic activity was disrupted during the enhanced community quarantine. The Luzon-wide lockdown has been extended until the end of April.

Under the Bayanihan to Heal as One Act, the government can realign items from the 2019 and 2020 national budgets so it can finance measures to contain COVID-19.

The “Build, Build, Build” budget in 2019 was P816.2 billion. In 2020, the main agencies implementing the program, the Department of Public Works and Highways (DPWH), and the Department of Transportation (DoTr), have been allocated P581.7 billion and P100.6 billion respectively.

However, DPWH Secretary Mark A. Villar said in an interview with ANC Tuesday that the department has reallocated a “small amount” — about P30 billion — from its “Build, Build, Build” program to help finance the government’s response to the crisis.

Mr. Villar also said last week that projects under the infrastructure program will be slightly delayed but targets for 2020 will still be met. — Gillian M. Cortez

Moody’s downgrades PHL growth outlook to 2.5%, flags ‘challenges’ to credit standing

MOODY’S Investors Service said it further downgraded its 2020 gross domestic product (GDP) forecast for the Philippines to 2.5% due to the escalating impact of the coronavirus disease 2019 (COVID-19) outbreak and the enhanced community quarantine (ECQ) imposed on Luzon.

It said COVID-19 will also pose near-term challenges to the country’s credit profile, which had been built on a recent record of strong economic performance, an improved fiscal position and limited vulnerability to external risks.

In its latest Credit Opinion about the Philippines, Moody’s said the new 2.5% GDP forecast slashes the already-downgraded 5.4% projection issued in March and the initial 6.2% forecast it gave last year.

“We lowered the forecasts for GDP growth to reflect the expected impact of the widening spread of the coronavirus both globally and in the Philippines,” Christian de Guzman, senior vice-president, Sovereign Risk Group at Moody’s said in an e-mail to BusinessWorld.

The revised view on growth from Moody’s falls within the -0.6% to 4.3% range of estimates issued for various scenarios by the National Economic and Development Authority in the wake of COVID-19. Initially, the government had set a 6.5-7.5% growth target for 2020.

According to Mr. De Guzman, the Luzon lockdown disrupts economic activity across all sectors.

“Domestically, the imposition of the ECQ will curtail domestic activity — not just household consumption and private investment, but also the government’s implementation of its infrastructure development program,” he said.

The original month-long lockdown was imposed on Luzon, which accounts for about 70% of Philippine GDP. The government has decided to extend the lockdown by two more weeks to April 30.

Mr. De Guzman said that the Moody’s growth forecast for the Philippines is likely to be further downgraded depending on the duration and extent of the containment effort.

“The growth outlook is subject to further downside if the coronavirus outbreak is not resolved by the middle of the year, and if more stringent containment measures are implemented in the Philippines or its largest trading partners,” he said.

Moody’s said the Philippines’ growth will be strong in the context of its peer economies.

“Moody’s expects the Philippines’ real GDP growth to remain robust relative to peers and that its fiscal metrics will continue to strengthen as the government continues to make progress on its socioeconomic reform agenda, particularly on tax reform,” it said.

However, it cited downside risks that could affect the rating outlook due to the broader impact of COVID-19.

“The global coronavirus outbreak threatens the Philippines through a number of channels, including trade, supply chain linkages, investment, remittances and tourism, while stringent containment measures will also sharply curtail domestic demand,” it said.

It added political developments could likewise be the potential source of downside risk for the Philippines’ “stable” outlook.

“Domestic political developments, such as the administration’s controversial campaign against illegal drugs, also present downside risks to the country’s institutional profile and could hinder the further implementation of reform,” it said.

Moody’s has a Baa2 rating for the Philippines, a notch above minimum investment grade, dating back to 2014.

The ratings agency said a possible review of the sovereign rating will depend on improvement in per capita income and government revenues growth if its borrowing costs fall to nearer those enjoyed by higher-rated economies.

“This could materialize over time as the government makes greater progress on its reform agenda, including addressing infrastructure gaps, increasing competitiveness and the ease of doing business, and ensuring sustainable and inclusive growth,” it said.

On the other hand, a downgrade could also follow a bout of macroeconomic instability, which could produce a deterioration in fiscal and government metrics, Moody’s said.

“The reversal of reforms that have supported recent gains in economic and fiscal strength would also likely lead to a downgrade,” it said. — Luz Wendy T. Noble

DTI extends rent grace period following extension of ECQ

THE Department of Trade and Industry (DTI) said the rent deferment grace period for commercial and residential tenants in force during the original enhanced community quarantine (ECQ) now applies to the extended lockdown as well, covering payments due for the period to April 30.

Trade Secretary Ramon M. Lopez told DZMM on Wednesday that the grace period will last for 30 days from the last payment due date within the extended lockdown. The sum of all payments due within the lockdown may be paid over six months.

“Dahil na-extend ‘yung ECQ, kung ano ‘yung amount dun pagsasamahin (Because the ECQ was extended, the amount due for the extended period will also be covered by the grace period),” he said.
The Luzon-wide lockdown to contain the coronavirus disease 2019 (COVID-19) was initially set to end on April 12, but was extended to April 30.

The DTI in a memorandum on April 4 said residential rents and commercial rents of micro, small and medium enterprises (MSMEs) falling due within the ECQ will have a grace period of 30 days.
Lessors who do not observe the 30-day grace period face imprisonment of at least two months and/or a fine of at least P10,000.
Mr. Lopez said in an interview with DZBB Wednesday that beyond the grace period, malls that have voluntarily waived rent for shops that have closed due to the lockdown may also extend their waivers accordingly.

“Voluntary ‘yun sa mga malls ulit kung pagbibigyan na nila ‘yung dalawang linggo na ito kasi sarado naman ‘yung negosyo (Rent waivers are voluntary for malls, and it’s up to them if they will forego rent for the extra two weeks, since the shops remain closed),” he said.
DTI in mid-March urged mall operators and commercial landlords to waive rent during the ECQ.
Major mall operators like SM Group, Ayala Malls, Megaworld Corp., Robinsons Land Corp. and Ortigas & Co., have announced they will waive rent for all tenants in their shopping malls that are not able to operate until April 14.

The malls have not yet announced whether their rent waivers will be extended.

“While we await new guidelines from the national government, the Ayala group will continue to take care of its employees as a priority and extend support as much as we can to our partners and communities through collaborative efforts,” Ayala Corp. Chairman and CEO Jaime Augusto Zobel de Ayala said in a statement. — Jenina P. Ibañez

Inflation projected to ease further on weak oil prices, falling demand

INFLATION is likely to ease further in the coming months as global oil prices continue to drop and domestic demand remains subdued due to business closures and movement restrictions, the Department of Finance (DoF) said.

In an economic bulletin Wednesday, the DoF said the slowdown in core inflation last month indicates further “easing inflation in the next few months.”

Headline inflation in March eased further to 2.5% from 2.6% in February and 3.3% a year earlier. Core inflation, which strips out volatile items like food and fuel, slowed to 3% last month from 3.2% in February.

“Still, it is important that in this time of expanded community quarantine (ECQ), the supply chain of basic goods and other necessary items, while subject to requirements of public health, should not be broken,” the DoF said.

PNB economist Jun Trinidad said low oil prices on top of weak domestic demand and higher unemployment will likely drive inflation lower.

In April, Mr. Trinidad said headline inflation will likely ease further to 2% or less.

“Beyond logistical issues, weaker commercial demand with the shutdown of malls and restaurants, and higher unemployment emerging as painful trade-offs to stabilizing the rising COVID-19 infections, will blend with low oil prices to eventually show up in faster disinflation,” Mr. Trinidad said in a research note.

He said for the second quarter, PNB expects “lackluster” demand-side pressures to overcome supply-side shocks emerging from the lockdown restrictions.

“Amid COVID-19’s deflationary (impact), BSP (Bangko Sentral ng Pilipinas) may cut its policy rate by 50 basis points (bps) plus an RRR (reserve requirement ratio) cut of 100 bps (when) the Monetary Board meets in May, to cushion downside demand risks,” the DoF said.

President Rodrigo R. Duterte extended the Luzon-wide ECQ to April 30. It was originally due to end on April 12. — Beatrice M. Laforga

Outlook slashed for Asia-Pacific growth on pandemic, US-China tensions

DISRUPTIONS brought about by the coronavirus disease 2019 (COVID-19) and lingering trade tensions will weigh on economic growth in Asia and the Pacific, according to a report issued by a United Nations (UN) agency.

The UN Economic and Social Commission for Asia and the Pacific’s (ESCAP) Economic and Social Survey of Asia and the Pacific 2020 report released Wednesday found that growth for developing countries in the Asia Pacific could slow to 3.7% in 2020 from 4.3% in 2019.

“Uncertainties about the region’s short-term economic outlook have increased considerably due to the multifaceted impact of COVID-19, which initially impaired China’s economy and has subsequently spread to other countries, impacting the region’s economies through supply, demand and financial links.”

Inflation in the region is expected to pick up to 4.8%, which the report anticipates is temporary, as consumer prices of essentials rise during the pandemic. Inflation is expected to fall to 4.2% in 2021.

UNESCAP said the region’s major trading partners are severely affected, with weakened demand from the European Union and the US impairing the region’s trade significantly.

Slower activity in the commodity markets during the pandemic is expected to hurt exporters.

“Lower commodity prices can reduce commodity exporting countries’ fiscal revenues, worsen their trade positions and put pressure on their currencies. In the region, exporters of primary commodities (excluding fuel) are vulnerable mainly due to China,” UNESCAP said.

Supply chains have also been disrupted, including those of the automobile and pharmaceutical industries.

COVID-19 has also caused declines in tourism, and countries have been suspending productive activities that may trigger capital flight and weaken currencies in the region.

The report said that trade tensions between the US and China remain the primary risk for the region’s short-term economic outlook.

Although the two countries had signed an initial trade agreement, the report said it does not address US concerns about China’s subsidies and state-owned enterprises. The report added that the trade targets are unrealistic, and enforcement of the agreement lacks a multilateral framework.

ESCAP said that the region should invest in health emergency preparedness in addition to immediate relief measures.

It also recommended the strengthening of social protections for the vulnerable in future health crises and the use of fiscal stimulus measures to help safeguard employment.

Countries affected by trade tensions should diversify trade networks, the report added.

“Multilateral cooperation is indispensable in order to address unresolved trade tensions and rising protectionism,” it added. — Jenina P. Ibañez

1...8,9768,9778,978...13,548Page 8,977 of 13,548
© 2024 BusinessWorld Publishing.
All rights reserved.
Read our privacy guidelines
Facebook Instagram Linkedin Twitter Youtube