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Philippines

Philippines: Creation Of 1.7mn Jobs Cuts Jobless Rate To 7.3%

16 March 2010

According to the labor survey, the jobless rate edged down to 7.3% in Jan, from 7.7% at the height of the global crisis a year-ago. Despite the drought effects on the farm sector and upcoming elections, 1.7mn new jobs were reported for employment growth of 5%yoy. A higher participation rate of 64.5%, compared to 63.3% a year-ago, suggests more members of the labor force sought jobs as labor conditions improved. A cut in the onshore jobless rate coupled with sustained overseas job deployment that upheld OFW remittance flows bode well for FY10 consumption prospects.

Philippines: Price Risk from Pending Electricity Tariff Rate Hikes

12 March 2010

This month, the electricity tariff rate of MERALCO may rise by nearly Php1/kwh. This may represent a 16.2% yoy gain in MERALCO’s power generation costs. We estimate an incremental effect of 0.17-0.24% on headline inflation. Estimated long-term impact could be as high as 0.78%.

Philippines: Dovish MB Talk Coincides with Phase Out of Accommodative Rediscounting Policy

11 March 2010

Unchanged policy rates were broadly expected as the outcome in today’s Monetary Board policy rate meeting. However policymakers adjusted the liquidity setting by lowering the ceiling of its rediscounting loan facility available to banks and tightening availment conditions. In its press release, the MB restored the pre-crisis ceiling of the facility of Php40bn from Php60bn. The MB reduced ‘the loan value of all eligible rediscounting papers from 90% to 80% of the borrowing banks’ credit instrument’. The required bank NPL ratio to avail of the facility was back to 2ppt in excess of the average NPL industry benchmark down from a 10ppt excess.

Philippines: Buoyant Revenues Restrain Fiscal Deficit in Jan to Php37.1bn

11 March 2010

Upbeat revenues of 18% YoY kept a lid on the fiscal deficit, which registered Php37.1bn in January. Fiscal expenditures rose 11% YoY. The fiscal update was slightly better than the fiscal gap of Php38bn a year-ago, and accounted for 33.5% of the 1Q10 budget deficit target of Php110.9bn. Since the FY10 budget approval and implementation was delayed, the government was operating under a re-enacted FY09 budget but it failed to aggravate fiscal pressures. Based on the foregoing, the fiscal update would likely be neutral to market sentiment.

Philippines: Strong Export Reading in Jan with 42.5% YoY Growth

10 March 2010

Actual exports in Jan overwhelmed street estimates including our own to highlight export recovery consistent with other regional exporters. Export growth in excess of 40%yoy enabled the export sector to regain the momentum it lost in Jan 2009 (-40.6%yoy). Seasonally adjusted exports registered a strong gain of 6.4%MoM sa in Jan to eclipse the drop of 1.3%MoM sa in Dec. We believe our latest intra-month export gain was underpinned by buoyant external demand.

Philippines: Aquino’s Lead Over Villar Expands in Survey As Estrada Gains

8 March 2010

It was the turn of former Pres. Estrada to surprise on the upside as his ratings soared by 6ppt for an 18% ‘market share’. That was good for third spot in the pre-election survey conducted by Pulse Asia. Estrada’s gain was at the expense of Sen. Villar, whose ratings fell 6ppt. With Aquino’s share steadying at 36%, the gap between Aquino and Villar widened to 7ppt, from practically dead-even in Jan.

Philippines: Headline CPI Eases But Core Speeds Up in Feb

5 March 2010

Inflation at 4.2% yoy in Feb beat Street estimates, including our own, but it’s not a reason to be complacent about upside inflation risk. Consider the following 3 factors: 1. Core inflation, 80% of CPI basket, up to 3.6% yoy in Feb from 3% yoy in Jan; 2. On sa basis, we estimate Feb headline inflation at 0.6% mom (Jan: 0.1%); 3. Extrapolation from Feb data.

IMF: Philippines Needs to Mobilize Revenues to ‘Free Up’ Spending

25 February 2010

The IMF’s recommended fiscal strategy is for a ‘credible medium-term consolidation plan’ to be pursued. Revenue-raising measures should spearhead the fiscal consolidation strategy that would also ‘allow for more pro-poor spending and growth enhancing investment’. Our take on the IMF’s recommendation is that it implies an approach to ‘tax and spend productively’ while remaining faithful to fiscal consolidation without neglecting or de-pr

Philippines: Assessing Macro Risk from a Severe Dry Spell

17 February 2010

Real threat of power reserve erosion: We suspect the real threat of power reserve erosion in the near-term would come from hydro power plants ‘drying up’ due to the severe dry spell in 1H10 while facing a surge in seasonal electricity demand during the Philippine summer months. Downside risk to baseline forecasts from power supply shock: As a worst-case scenario, our FY10 GDP growth forecast of 3.7% could shed 0.14ppt because of the impending industrial output slowdown. Support inflation outlook breaching 5% upside. Policy Implications: Downside risk to growth on power shortages may heighten likelihood of fiscal slippage on limited flexibility to trim spending if government spends more to offset weather shocks

Philippines: New Monthly High for OFW Remittances in Dec

17 February 2010

BSP reported a new monthly high for OFW remittance flows of US$1.57bn in Dec, up 11.4%yoy. This was slightly less than our expectations of a 12%yoy growth for the month but still elevated, consistent with the strong end-year remittance season. Despite favourable overseas job market prospects with the global recovery, we think the high base effect, Dubai world’s financial problems, and risk contagion from severe sovereign debt problems in Greece and other European member countries, would probably cause OFW remittance growth to taper off to the 5%-6% range this year.

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