Philippines Microeconomic Weekly Update #49

MACROECONOMICS WEEKLY UPDATE

In August, the country’s trade deficit dropped 31.5% to $4.1 billion compared to $6 billion a year ago. PSA data revealed a slightly lower deficit than July, at $4.19 billion. Total exports increased to $6.70 billion (up 4.2%) while imports decreased to $10.83 billion (down 13.1%) compared to the same month last year.

FDI inflow from January to July decreased by 14.7% to $4.66 billion due to global growth concerns. In July, FDI increased by nearly 36% to $753 million. Total reinvestment of earnings dropped 13% to $573 million.

Moody’s Analytics anticipates no interest rate increase in November, despite a 6.1% inflation rate in September. The Monetary Board will consider Q3 GDP results and October inflation data in their decision.

INDUSTRY UPDATE

TOURISM

The Davao-Hong Kong direct flights by Royal Air Philippines, launched on October 8, are seen as a positive development by local tourism stakeholders, improving travel connectivity. According to DOT-Davao director Tanya Rabat-Tan, the direct flight offers convenient access between Davao and Hong Kong.

TELECOMMUNICATIONS 

The Philippines has the potential to be the next key data center hub in Southeast Asia, said Ernest Cu, Globe Group President and CEO, as he cited the company’s venture into the data business with the intent to own the space in the next few years.

"Location-wise, we are in the middle of Southeast Asia, not far from most capitals in the ASEAN. With the added connectivity, with the added data center capacity, we believe that the Philippines will become a great alternative now for the many hyperscale's that have to serve the region," - Ernest Cu,2023

In an interview with Bloomberg Singapore, Cu noted that the country is strategically positioned to capitalize on the shifting dynamics in the region. With Hong Kong’s geopolitical situation and Singapore’s capacity limitations, the Philippines is increasingly seen as an attractive location for hyperscale’s.

HOLDINGS 

Listed holding firm SM Investments Corp. (SMIC) is optimistic about sustaining growth for the remaining months of the year due to increased consumer spending, according to its chairman last week during a conference organized by the Financial Executives Institute of the Philippines in Pasay City.

“The growth will continue, especially that Christmas is coming. The latter part of the third quarter and the fourth quarter are the strong periods. -” SMIC Chairman Amando M. Tetangco, Jr.

additionally, according to Mr. Tetangco

“The performance will continue to be very good. With the reopening of the economy, we have seen the recovery over the last year and a half. We think that given the continued growth of the economy; this would further support the continuing expansion in the operations of the SM group." Ernest Cu,20

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