Quantcast
Latest Stories

DBS predicts ‘extended sweet spot’ for country

By

The Philippine economy remains in an extended sweet spot considering the strong outlook for growth and the prevailing low-inflation environment, according to the DBS Group.

The financial service provider said in a research note that such an environment enables the Bangko Sentral ng Pilipinas to maintain low policy rates over the short term.

“Notably, the latest inflation print came in at just 3.4 percent year-on-year and this figure is actually skewed higher due to an increase in sin taxes,” DBS said.

Earlier this week, the National Statistics Office reported that inflation inched up to a six-month high, mainly due to a 29-percent uptick in prices of tobacco and alcohol following the implementation of jacked-up excise tax rates.

Another major factor cited was the continued rise of the heavily weighted food and non-alcoholic beverage group in the consumer price index.

“With no growth or inflation worries in the immediate term, BSP has focused its attention on handling portfolio inflows that have resulted in the peso turning in one of the best performance against the greenback among Asian currencies last year,” DBS said.

“While interest rate differentials are not the only factor affecting portfolio flows, the fact that inflation is low and that credit growth has been moderate imply less constraints on the BSP,” the bank added.

The Singapore-based bank reiterated its projection that the domestic economy will grow at a “relatively fast” 6 percent this year even if demand-driven upward pressure on inflation might be observed later in the year.

Economists at the state-run think tank Philippine Institute for Development Studies (PIDS) is more optimistic, pegging 2013 growth at a projected 6.2 percent although this is at the lower end of government economic managers’ assumed range of 6 percent to 7 percent.

According to PIDS, growth this year will be “in the range of uncertainty in terms of implications for sustainability.”

In an earlier research note, DBS said more signs of inflation are likely to appear amid robust economic growth, especially once construction for public-private partnership projects kicks in.

The bank added that oil prices will be another factor to watch considering that signs of stabilization in the major economies have led to higher oil prices over the last few months. On top of that, some pass-through effects on consumer prices are inevitable due to limited subsidies on fuel.

Also, DBS continues to expect a 25-basis-point rise in key policy rates “by the end of the year.”

This will push the overnight borrowing rate to 3.75 percent and the overnight lending rate to 5.75 percent.


Follow Us


Follow us on Facebook Follow on Twitter Follow on Twitter


Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Bangko Sentral ng Pilipinas , Business , Inflation , National Statistics Office , News , tobacco

  • carlcid

    Sana matutuloy yong “sweet spot” na sinasabi nila. I hope it continues for a long, long time. Sana. But the reality is that bubbles do burst, sooner or later. Timing is everything.



Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94
Advertisement
Advertisement

News

  • Militants kill 14 Algerian soldiers in ambush
  • Pope Francis, huge crowd joyously celebrate Easter
  • 4 French journalists freed from Syria captors home
  • Thousands celebrate Easter in Holy Land
  • Transcript reveals confusion over ferry evacuation
  • Sports

  • Red-hot Alaska rips injury-depleted San Mig Coffee
  • Pacquiao courtesy call to Aquino set for Monday
  • Nick Calathes suspension a reminder of supplement risk
  • Teague scores 28 as Hawks soar past Pacers in Game 1
  • Warriors beat Clippers in playoff opener
  • Lifestyle

  • Angono petroglyphs in danger of disappearing
  • Britain’s baby Prince George visits Australian zoo
  • Noli Yamsuan, Cardinal Sin’s ‘official’ photographer: ‘I could smell the aftershave lotion of the Pope’
  • Simplifying and lightening life
  • Where to go for Easter night-out
  • Entertainment

  • Show-biz celebrities’ other choices of summer getaway
  • Why ‘Noah’ can’t dock his ark at Philippine theaters
  • Acclaimed artist goes wild while on holiday
  • Believing in this mermaid
  • Missing Xian
  • Business

  • Top-selling insurance agent opens her dream café
  • Connecting and transacting with one another
  • Building wealth for health
  • Why Mandaue Foam buys, rather than rents, space
  • A workplace of new possibilities
  • Technology

  • Nasa’s moon-orbiting robot crashes down
  • Netizens pay respects to Gabriel Garcia Marquez
  • Nokia recalls 30,000 chargers for Lumia 2520 tablet
  • Facebook rolls out ‘nearby friends’ feature
  • Netizens seethe over Aquino’s ‘sacrifice’ message
  • Opinion

  • Epiphany
  • Unpaid creditor vs distressed debtor
  • Moving on
  • From culinary desert to paradise
  • Response to China: ‘Usjaphil’
  • Global Nation

  • Tim Tebow’s charity hospital in Davao seen to open in 7 months
  • OFW died of Mers-CoV in Saudi Arabia, says family
  • Aquino, Obama to tackle US pivot to Asia during state visit
  • Asia seeks Obama’s assurance in territorial spats
  • Cesar Chavez movie sparks memories of Fil-Am labor leaders
  • Marketplace