Most Filipinos expect inflation to continue to rise

Most Fiipinos see inflation rising over the next year and do not expect the pace of price increases to normalize anytime soon, according to a survey by Ipsos.

In its latest Cost of Living Monitor, Ipsos found that 80% of Filipinos see the rate of inflation to rise in the next year.

“While economists point out that inflation — and interest rates — have fallen in many countries, you might assume that consumers should be feeling more positive by now about their own financial situation and more optimistic about where their country’s economy is headed in 2025,” Ipsos Chief Executive Officer Ben Page said.

“In fact, they are the opposite. The legacy of high inflation over the past few years is that an expectation of price rises is now hard-wired into the public consciousness,” he added.

The Philippines’ outcome is also much higher than the 65% overall average across 32 countries.

“This is something that is felt across the board. In 21 of the 32 countries surveyed people are more likely to think prices will rise at a faster rate than they did earlier this year,” Ipsos said.

Most Filipinos think that inflation has yet to normalize, the survey showed, with 28% expecting inflation to never return to normal. On the other hand, 27% see prices normalizing after next year, within the next year (26%), within the next six months (5%), and within the next three months (7%).

Only 6% of respondents said that inflation had already normalized.

Inflation quickened to 2.5% in November from 2.3% in October as food prices rose after a series of typhoons hit the country. In the 11-month period, headline inflation averaged 3.2%.

This year so far, inflation has settled within the 2-4% range, except for the 4.4% spike in July.

The central bank expects inflation to settle at 3.1% this year, 3.2% in 2025 and 3.4% in 2026. However, the Bangko Sentral ng Pilipinas (BSP) has said that the risks to the inflation outlook for next year until 2026 have shifted to the upside.

“While inflation rates are going down, people are not feeling it in the way policy makers and central banks would have hoped,” Ipsos said. “People expect price rises across all areas of spending, from utilities to food.”

Globally, 70% of respondents attribute the state of the global economy as the biggest contributor to the rising cost of living. This is followed by government policies (69%), interest rates (66%), businesses making excessive profits (62%) and the Russia-Ukraine war (58%).

Meanwhile, 75% of Filipinos expect interest rates to rise over the next year.

The BSP began its easing cycle in August this year, delivering a total of 50 basis points (bps) worth of rate cuts so far. This brought the benchmark to 6%.

The Monetary Board could deliver another 25-bp cut at its final policy review of the year on Dec. 19.

“There is often a time lag between inflation rates subsiding and consumer confidence returning. But this time things feel rather different. What we are now seeing in many countries is a rise in the number of people who say they are financially struggling,” according to Ipsos.

The survey also showed that 10% of Filipinos expect their own standard of living to fall over the next 12 months.

In terms of financial management, only 37% of Filipinos are “doing alright.” This is compared to the respondents that said they are “just about getting by” (26%), “finding it quite difficult” (20%), “finding it very difficult” (9%), and “living comfortably” (9%).

Meanwhile, 48% of Filipinos see the economy as being currently in a recession, as far as they are aware. On the other hand, 28% say the opposite while 23% do not know.

TAX CUTS

“Across 32 countries people say they prefer tax cuts even if it means less money for public services, over spending more and paying greater taxes,” Ipsos said.

“However, this masks big differences across countries. Türkiye, Romania and the Philippines back tax cuts, while Indonesia and Sweden want better public services.”

The survey found more than half (52%) of Filipinos prefer that their personal taxes be cut even if it means there will be less government spending on public services.

The survey also found 70% of Filipinos expect the taxes that they pay to rise over the next year.

The Department of Finance  has said it does not plan to introduce new taxes this year and potentially until the end of the Marcos administration, apart from those already pending in Congress.

The department’s priority tax measures include the value-added tax on digital service providers, excise taxes on single-use plastics and pickup trucks, the rationalization of the mining fiscal regime, and the motor vehicle road user’s charge, among others.

Source: Business World

Trump 2.0 seen as a win for Philippines real estate

The country’s real estate industry is expected to benefit and flourish further under a Donald Trump presidency, according to integrated real estate services company Santos Knight Frank.

In a press briefing, Santos Knight Frank chairman and CEO Rick Santos said that Trump’s win would benefit the Philippine real estate sector.

“President Trump is a businessman. He’s a real estate guy, so we think that will be positive,” Santos said.

“He’s very much into real estate. So I couldn’t think of a better person to help the Philippine real estate sector and business of the Philippines than probably one of the most high-profile real estate individuals and personalities anywhere,” he said.

At present, Santos said the Philippine real estate sector is riding on a wave of opportunities driven by proactive measures from the current administration to open the country further to investments.

He said that the Marcos administration’s CREATE MORE Act, in particular, promotes investment-friendly policies designed to stimulate business growth and demand for real estate.

“These efforts are creating a more dynamic and business-friendly environment, paving the way for sustained development and progress,” Santos said.

“Momentum in the market remains strong, particularly in the residential segment, where Manila has once again secured the top spot in Knight Frank’s Prime Global Cities Index. Demand continues to drive price growth in this sector, fueled by limited supply,” he said.

He said a Trump presidency would be a win for the Philippines, with potentially limited downside.

“There’s always good. There’s always bad. But I’m very optimistic,” he said.

According to Santos, Philippine-US relations will be positive for strategic and business purposes.

He said that Trump’s global trade policies, combined with the recently signed CREATE MORE law, will significantly influence the country’s industrial and manufacturing sectors.

“From a strategic level, the Trump administration and the people he has appointed are taking a strong stance to support the treaty ally and the long US-Philippine relationship. That’s going to be positive for the Philippines from a strategic, defense, trading and business perspective,” Santos said.

“We think the Trump administration will continue to be good for Philippine business. Also, from a US-Philippine perspective, we have never seen US-Philippine relations so good, so strong, so important and so relevant,” he said.

Source: Philstar

PH to miss income status goal

Economic growth will likely fall short of official targets for this year and the next, a government-owned think tank said, delaying the Philippines' bid to hit upper middle-income status by 2025.

"[The] outlook on Philippine GDP (gross domestic product) growth remains volatile, uncertain, complex, ambiguous, and disruptive (VUCAD) as indicators remain conditioned on economic policies to be implemented by global powers and how responsive the economy would be," the Philippine Institute for Development Studies (PIDS) said in a November discussion paper.

Lower-than-expected third-quarter GDP growth of 5.2 percent has put this year's 6.0- to 7.0-percent goal at risk. As of end-September, growth was below target at 5.8 percent — a 6.6-percent fourth-quarter expansion will be needed to hit the lower end of 6.0 percent.

The PIDS said that October-December growth could pick up to 6.0 percent, driven by "continued government spending on infrastructure development but hampered by the damages of recent natural calamities."

While higher than the previous quarter, full-year growth will fall between 5.8 percent and 6.0 percent, it added.

Moreover, 2025 growth is expected to also fall below the 6.5- to 7.5-percent target at 6.1 percent. Easing inflation and policy rates that will reinforce both consumption and investment activities of the private and public sectors were seen as driving the expansion.

"While the Philippines continued above-expectation results in the first half of 2024 at 6.1 percent... it remained short of the required growth for the Philippines to be escalated to an upper middle-income economy by 2025," the think tank noted.

The goal can be achieved by late next year or early in 2026 " if the economy can grow as much as 8.0 percent with an exchange rate not depreciating much beyond the PHP/USD 58.00 mark," the PIDS said.

Hiking gross national income (GNI) will be crucial to achieving the income status goal, and the think tank said that "by sustaining at least a six to seven percent GDP growth, accompanied by continued growth in net factor income from abroad through remittances and overseas investment income, GNI can increase alongside the current decline in average annual population growth rate."

The country's GNI per capita rose to $4,230 in 2023, up from $3,950 in 2022. This is still within the lower-middle income range of $1,146 to $4,515, which was updated from the $1,136 to $4,465 level set last year.

To achieve upper-middle income status, GNI per capita has to hit $4,516 to $14,005, also now higher than the previous range of $4,466 to $13,845.

Economic managers are still optimistic about hitting the income status by the end of next year, stressing that a nominal growth of 10 percent should take the country there.

Nominal GDP growth, which is not adjusted for inflation, was reported at 8.8 percent as of March 2024, lower than the 9.28 percent recorded in December 2023.

Significant headwinds to growth will persist into next year, the PIDS said, with the key risks being a global economic slowdown, inflationary pressures, currency volatility, rapid climate change, political and governance issues, skills mismatches and other labor issues, and geopolitical tensions.

To address this, it recommended that households improve their financial resilience, private firms adapt to a VUCAD economy and the government work on promoting economic stability and resilience via effective policy directions.

Source: Manila Times