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
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.
