Philippines Microeconomic Weekly Update #56

MACROECONOMICS WEEKLY UPDATE

In 2023, the Philippine economy grew by 5.6%, falling short of the government’s 7.6% target, mainly due to decreased state spending, exports, and subdued consumption from high interest rates. Despite missing the target, the GDP exceeded the median estimate of 5.5% from a recent poll of 20 economists by BusinessWorld. In the fourth quarter, the Philippines’ growth ranked just behind Vietnam at 6.7%, ahead of China (5.2%), and Malaysia (3.4%) among Asian countries with available data, according to the Philippine Statistics Authority.

Fitch Solutions unit BMI Research anticipates a rebound in Philippine tourist arrivals to pre-pandemic levels this year, following a robust performance in 2023. The projection for 2024 is set at 8.21 million arrivals, surpassing both 2023 and the pre-pandemic figures of 2019. Despite the Department of Tourism reporting 5 million tourist arrivals in 2023, representing 61.1% of pre-pandemic levels, BMI’s expectation was slightly exceeded, as it had initially forecasted 4.9 million arrivals for the same year.

In the Philippines, a local fintech firm predicts that over half of retail payments will shift to digital platforms this year, with projections indicating a 67% adoption rate. This estimate is based on the Bangko Sentral ng Pilipinas’ (BSP) reported 43% average year-on-year growth in digital retail payments from 2019 to 2022, accounting for the post-pandemic slowdown. BSP data reveals that online payments constituted 42.1% of total retail transactions in 2022, up from 30.3% the previous year. Aligning with the Philippine Development Plan, the government aims for 60-70% of retail payments to be conducted online by 2028.

In the Philippines, a local fintech firm predicts that over half of retail payments will shift to digital platforms this year, with projections indicating a 67% adoption rate. This estimate is based on the Bangko Sentral ng Pilipinas’ (BSP) reported 43% average year-on-year growth in digital retail payments from 2019 to 2022, accounting for the post-pandemic slowdown. BSP data reveals that online payments constituted 42.1% of total retail transactions in 2022, up from 30.3% the previous year. Aligning with the Philippine Development Plan, the government aims for 60-70% of retail payments to be conducted online by 2028.

INDUSTRY UPDATE

TELECOMMUNICATION 

Converge ICT Solutions Inc. is ready to fill the void in the pay television space as Sky Cable is about to exit the cable business following its merger with PLDT Inc. Jesus Romero, chief operations officer at Converge, told reporters last week they were looking at further expanding their pay TV service, which is only currently available for the upscale customers of the fiber internet service provider.

AGRICULTURE

Analysts anticipate a rebound in fisheries production this year, attributing the boost to improvements in supporting infrastructure and the development of agro-industrial estates dedicated to fisheries products. Asis G. Perez, convenor of advocacy group Tugon Kabuhayan, highlighted the potential for increased production across all levels through this value chain approach. The Department of Agriculture (DA) has expressed plans to invest in additional infrastructure to bolster support for the agri-fisheries sector.

BANKING

In 2023, the Land Bank of the Philippines (LBP) achieved a record-high net income of P40.3 billion (USD 715.99 million), surpassing its target of P35 billion (USD 621.82 million) with a return on equity of 16.87%. The financial statement is currently unavailable. LBP’s capital grew to P266.8 billion (USD 4.74 billion), a 27% year-on-year increase, contributing to a capital adequacy ratio (CAR) of 16.35% and a common equity Tier 1 (CET1) ratio of 15.46%. The bank’s assets rose by 4.2% to P3.3 trillion (USD 58.62 billion), driven by income from loans and investments. LBP President and CEO Lynette V. Ortiz aims for at least a 10-12% growth in net income this year.

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