...the 2012 PH growth forecast (Moody's)

Moody's unit forecasts Phl growth at 5.2% this year

 

 

Philstar – Sat, Oct 13, 2012

 

 

 

MANILA, Philippines - Economic growth could hit 5.2 percent this year as strong domestic demand keeps the Philippines afloat amid the persistent weakness of the global economy, a unit of debt watcher Moody’s Investors Service said yesterday.

 

“We recently revised our outlook for the Philippines to 5.2 percent from 4.7 percent. The first half economic growth was pretty strong,” said Katrina Ell, analyst at the New York-based Moody’s Analytics.

The five-percent forecast for next year has been retained, she added.

The local economy expanded by 6.1 percent during the first half of the year, a far cry from the 4.2 percent recorded same period last year. This also slightly surpassed the government’s five- to six-percent target for the year.

The revision was the second for the Philippines under Moody’s watch. The credit rater initially expected economic growth to hit only four percent this year. This was revised upwards to 4.7 percent in June after a surprising 6.4-percent first quarter growth.

Ell said strong consumption and accelerated government spending have boosted domestic demand, which “sort of overcame” the weakness of the external environment.

“Basically, we have factored in the weakness of the exports but that was sort of overcame by domestic strength,” Ell said in a phone interview. Merchandise exports plunged nine percent in August, its weakest performance in eight months.

In a report released yesterday, Moody’s said the resiliency of the services sector is also a factor for the Philippines’ stellar economic performance, which has been mirrored in most countries comprising the Association of South East Asian Nations (ASEAN).

There was also a “steady rise” in investment as indicated by dipping savings and increasing bank lending.

“ASEAN’s investment drive has coincided with a decline in savings in Malaysia, Thailand, and the Philippines. This is consistent with rising domestic consumption and the deteriorating current account positions across the region,” the report said.

“If the shift towards domestic consumption continues, export competitiveness could falter as resources shift to domestic facing industries,” it added.

Nevertheless, economic health is seen to “stabilize” by the middle of next year, Moody’s said, and as such monetary authorities will likely hold off from cutting key rates further.

The Philippines experienced three rate cuts this year, putting the benchmarks 75 basis points lower to record-lows of 3.75 percent and 5.75 percent for overnight borrowing and lending, respectively.

Ell said further rate cuts for the year have been ruled out. The report, however, said “policymakers in ASEAN stand ready to loosen policy further should the global economy take a turn for the worse.”

“Risks to growth for the Philippines will be if the external weakness takes a turn for the worse, in effect, remittance could go lower,” she said. - By Prinz P. Magtulis (Philstar News Service, www.philstar.com)

...the Bangsamoro

UN Chief Hails Aquino Over ‘Bangsamoro’ Deal

Manila Bulletin

October 9, 2012

 

 

UNITED NATIONS (AFP) — UN Secretary General Ban Ki-moon Monday Ban commended President Benigno S. Aquino III for his vision and courage, as well as the commitment of the Moro Islamic Liberation Front (MILF) leadership in reaching a framework peace accord ending a decades-long Muslim separatist insurgency that killed 150,000 people.

This developed as Malacañang said nobody, not even the Moro National Liberation Front (MNLF), will be left out in the government’s consultations on the proposed creation of the new autonomous Bangsamoro region.

The agreement would see the establishment of a new semi-autonomous Muslim area in the resource-rich Mindanao, which the 12,000-strong MILF regards as its ancestral homeland.

Ban expressed “his heartfelt wishes for peace and prosperity to the government and the people of the Philippines,” and in particular the people in the new semi-autonomous region, called Bangsamoro.

Mindanao served as a base for the MILF, the biggest and most important remaining rebel group, after the Moro National Liberation Front signed a peace pact with the government in 1996.

It is one of the most fertile and resource-rich parts in the archipelago -- but decades of violence and unrest have left it into one of the poorest regions of the Philippines.

The rebellion, which began in 1978, has left 150,000 people dead and displaced hundreds of thousands more.

Senate President Juan Ponce Enrile said the framework agreement is doable without a constitutional amendment. This agreement must be “given a chance to work” and must be studied “carefully before shooting it down,” he stressed.

In a brief talk with Senate reporters, Enrile said the creation of Bangsamoro, a political entity that will replace the current Autonomous Region in Muslim Mindanao (ARMM), does not require amendments to the 1987 Constitution.

Chief Philippine negotiator Marvic Leonen, in an interview with Manila Bulletin, allayed fears about the framework peace deal, clarifying fears that the Moro National Liberation Front (MNLF) will be disregarded in the crafting of the peace agreement.

Leonen is certain that all Bangsamoro organizations such as the MNLF will play a crucial role in the crafting of the peace agreement.

He noted that the government peace panel (GPH) is certain to provide a seat for the MNLF in the creation of a Transition Commission that will work in the drafting of a Bangsamoro Basic Law to jumpstart the agreement. “We are definite that the MNLF will have a seat in the GPH,” Leonen said, citing that Cotabato City Vice Mayor Muslimin Sema, one of the founding members of the MNLF, has expressed his support to the framework agreement. Leonen also maintained that the agreement will push through this time following the stalling of a previous agreement five years ago on the memorandum of agreement on ancestral domain.

Leonen expressed confidence that there will no longer be any more delays in the creation of a Bangsamoro government. “How can you be wrong in this kind of approach? Look at the big picture.

The big picture is independence. They turned down to Cha-cha. They did not ask for an Islamic state.

We have been fair with respect to their territory, which is smaller than the MOA-AD, and culture such as applying the Shar’iah Court to the Muslims,” he said.

Deputy presidential spokeswoman Abigail Valte said the government has already posted the preliminary peace agreement with the MILF on its official website precisely to encourage public discourse prior to its formal signing next week.

Valte made the remarks after the MNLF reportedly expressed concern over the framework deal that seeks to create a new autonomous political entity by 2016.

Even former MNLF chief Nur Misuari has questioned the draft GRP-MILF peace agreement, insisting the government has not yet fully complied with the pact signed with the MNLF in 1996.

“The draft framework agreement was precisely announced even before the signing because we want to engage the public. We want to have discussions and consultations with the stakeholders,” Valte said in a Palace press briefing.

Meanwhile, various nations throughout the world has congratulated the Philippines and the MILF on the successful conclusion of the negotiations on the framework deal.

According to Catherine Ashton, the High Representative of European Union for Foreign Affairs and Security Policy and Vice-President of the Commission, "the early signature of this truly historical document is a major step towards a long-lasting peace in Mindanao, which will lead the island to stability and prosperity."

Ashton added that the EU recognizes the contribution of the Malaysian facilitator of the peace talks, Tengku Dato' Ab Ghafar Tengku Mohamed as well as the members of the International Contact Group, to the successful conclusion of the peace negotiations.

Earlier, United States Ambassador to Manila Harry K. Thomas, Jr. welcomed the announcement by the Philippines and the MILF that the two sides finalized a framework peace agreement.

UK Foreign Secretary William Hague said the UK believes the framework agreementhas the potential to bring peace, stability, and development for Muslims in Mindanao.

British Ambassador to Manila Stephen Lillie said the peace process between the GPH and the MILF has taken a huge step forward with this framework agreement. —wth reports from Sarah H. Velasco, Genalyn D. Kabiling, Mario B. Casayuran, and Roy C. Mabasa

...the New Tiger

Sturdy banks and enough foreign exchange reserves also put the countries at an advantage, it added.

National debt also remains low in the Philippines and Indonesia compared to countries in the West, "leaving both enough room to boost their economies in case of need," the report said.

Market Watch also noted that the two countries' stock markets "are among the world's best performing since the end of 2008."

Marking the two countries' takeoff, Market Watch said, is their leap from borrower to lender status in the International Monetary Fund, with each pledging $1 billion to replenish the multilateral bank's funds.

This, as Market Watch noted that the IMF bailed out the two countries during the Asian Financial Crisis of the late 1990s.

These developments have not escaped the view of global investors which are now turning their heads toward the Philippines and Indonesia, Market Watch said.

"Both markets have been a popular choice for investors since 2009 and have extended a solid upward run with sharp gains so far this year," it noted.

Market Watch highlighted the Philippines' status as second to Thailand's best-performing stock exchange in Asia so far this year, rising 18 percent. Indonesia's Stock Exchange meanwhile gained 4 percent.

"Signaling the strength of foreign investor interest in both the Philippines and Indonesia, new products have been developed to provide overseas investors with more options to access those markets," it noted.

The two countries are not free from risks, however, with Market Watch noting that challenges include "sustaining political stability, tackling widespread corruption and improving their poor infrastructure."

The Philippines' heavy dependence on remittances from overseas workers may also prove to its disadvantage amid a weak global environment, the report added.

This, even as it echoed forecasts that the services sector and high remittances will drive economic growht in the Philippines this year.

"To sustain its trajectory, the Philippines needs to not only get more value out of existing industries, but also forge new ones," Market Watch said.

PH is among Southeast Asia's 'New Tigers'

By Kim Arveen Patria

Yahoo! Southeast Asia Newsroom

Mon, Oct 8, 2012

 

A view of EDSA during the rush hour. (Photo courtesy of Yen Baet)

The Philippines' recovery from the Asian financial crisis and its high potential for growth has prodded a business website to name it one of the "New Tigers" in Southeast Asia.

The Philippines, as well as Indonesia, have "come of age" and are "poised to drive future growth and grab more economic power," Market Watch said.

"In an economically vibrant Southeast Asia, Indonesia and the Philippines stand out as the region's 'New Tigers' with the potential to leave a bigger imprint on global growth for years to come while the developed world struggles with excess debt and traditional regional heavyweights China and India lose momentum," it added.

This review of the Philippines is the latest in a string of recent positive assessments and forecasts, most of them noting deep-seated governance reforms and its impact on ease of doing business.

The Philippines and Indonesia's edge over other countries in the region, Market Watch said, include "large and young labor force, an expanding middle class and... elected governments with policies inspiring investor confidence."

An expansion in the tourism sector may be the perfect fit, with the report noting that it may "help absorb labor in its swelling population."

For tourism to takeoff, however, Market Watch said the government must address the issue of poor infrastructure.

Aging roads and inadequate airports choke economic development while also discouraging tourism, the report said.

"The problems are curtailing the growth of what many see as the critical next-wave industry," it added.

Aside from tourism, mining could also drive growth for the Philippines, Market Watch said.

"The country is rich in minerals including copper, gold and nickel, but development of the mining industry has been stalled by political resistance and layers of red tape," the report noted.

"Regardless of which industries the Philippines seeks to develop, international backing will be crucial," Market Watch said.

The world-recognized four Asian Tigers are Hong Kong, Singapore, South Korea, and Taiwan.