Philippines trims 2023 GDP growth target due to global risks

• Government uses 55-59 per dollar FX assumption for 2023 goals

• Inflation seen to cool from 2023 after quickening to 2008 high

Philippine President Ferdinand Marcos Jr.’s economic team lowered its 2023 growth forecast as the global outlook worsens and domestic inflation hovers near a 14-year high.

Gross domestic product will probably expand 6%-7% next year from a previous projection of 6.5%-8%, the Development Budget Coordination Committee, which sets economic assumptions for fiscal purposes, said Monday. It left this year’s growth estimate of 6.5% to 7.5% unchanged.

“This momentum is expected to slightly decelerate in 2023,” DBCC said in a statement, “considering external headwinds such as the slowdown in major advanced economies.”

The latest projections come as Marcos nears completion of his first six months in office amid a slew of challenges including soaring prices and borrowing costs and tepid global demand. Despite the forecast reduction, the Philippines is still seen as among economic growth leaders in Asia.

Inflation is expected to peak this month after the central bank unleashed its most aggressive monetary tightening in two decades to quell the fastest price gains since 2008, as well as shore up the peso. The economic team expects inflation to average 5.8% this year before cooling to 2.5%-4.5% in 2023 and ease back to the 2%-4% target band through 2028.

GDP is expected to pick-up in 2024-2028 and expand by 6.5%-8%, supported by state intervention in agriculture and electronics industries.

Exchange Rate

The economic team used an exchange rate assumption of 55-59 per dollar for 2023 from a range of 54-55 this year on heightened global uncertainties and the Federal Reserve’s aggressive policy tightening.

While the peso remains Southeast Asia’s worst performer this year, it has gained about 5% this quarter, along with most peers in the region. The Philippine currency, which slumped to a record low 59 per dollar weeks ago, is little changed as of the noon break Monday at 55.80.

“As we move forward amid the sharp increase in inflation this year, the government commits to take actions that will mitigate the lingering effects of the Covid-19 pandemic and impact of geopolitical tensions,” DBCC said.

Here are the DBCC’s latest estimates:

Source: Bloomberg

The Philippines’ inflation rate surges to 8% in November 2022

The country’s headline inflation accelerated further to 8.0 percent in November 2022, from 7.7 percent in October 2022.

This is the highest recorded inflation since November 2008. With this month’s inflation, the country’s average inflation rate from January to November 2022 stood at 5.6 percent.

In November 2021, inflation rate was observed at 3.7 percent.

The sustained acceleration of inflation in November 2022 was mainly due to the higher year-on-year growth rate in the index of food and non-alcoholic beverages at 10.0 percent, from 9.4 percent in October 2022. Also contributing to the uptrend is the higher annual increment in the index of restaurants and accommodation services at 6.5 percent, from 5.7 percent in October 2022. Moreover, relative to their annual rates in October 2022, annual increases were also higher in the indices of the following commodity groups:

a. Alcoholic beverages and tobacco, 10.6 percent; b. Clothing and footwear, 3.6 percent; c. Furnishings, household equipment and maintenance, 4.5 percent; d. Health, 2.8 percent; e. Information and communication, 0.7 percent; f. Recreation, sport and culture, 3.3 percent; g. Education services, 3.6 percent; and h. Personal care, and miscellaneous goods and services, 4.2 percent.

On the other hand, slower year-on-year increases were observed in the indices of housing, water, electricity, gas and other fuels at 6.9 percent; and transport at 12.3 percent.

Meanwhile, the index of financial services retained its previous month’s inflation rate.

Core inflation, which excludes selected food and energy items in the headline inflation, also increased to 6.5 percent in November 2022, from 5.9 percent in October 2022. In November 2021, core inflation was lower at 2.4 percent.

Food inflation at the national level rose further to 10.3 percent in November 2022, from 9.8 percent in October 2022. In November 2021, food inflation stood at 2.3 percent.

The uptick in the food inflation was primarily influenced by the higher annual growths in the vegetables, tubers, plantains, cooking bananas and pulses index at 25.8 percent; and rice index at 3.1 percent. In addition, faster annual increments were noted in the following food groups:

a. Flour, bread, other bakery products, pasta products, cereals, 10.3 percent; b. Milk, other dairy products and eggs, 9.4 percent; c. Fruits and nuts, 6.2 percent; d. Sugar, confectionery and desserts, 38.0 percent; and e. Food products not elsewhere classified, 8.9 percent.

On the contrary, slower annual growths were observed in the indices of the following food groups:

a. Corn, 27.0 percent; b. Meat and other parts of slaughtered land animals, 8.6 percent; c. Fish and other seafood, 8.3 percent; and d. Oils and fats, 19.8 percent.

Source: PSA

House OKs bill boosting anti-discrimination law for women workers

A bill seeking to strengthen the anti-discrimination provisions under the Labor Code of the Philippines that were instituted to safeguard women employees was unanimously passed by the lower chamber on third and final reading Monday afternoon, Nov. 28.

The House of Representatives, voting 248-0-0 (yes-no-abstain), approved House Bill (HB) No. 447, which intends to amend Article 135 of Presidential Decree (PD) No. 442, as amended, (Article 133 under the renumbered version of the law), as well as Article 137 (Article 135 under the renumbered version).

The bill seeks to strengthen the anti-discrimination provisions of the law by providing that it “shall be unlawful for any employer to discriminate against any woman employee with respect to terms and conditions of employment solely on account of her sex or characteristics of her sex, whether actual or presumed”.

It also revised the second act of discrimination and added a third one under Article 135, as amended.

Under the House bill, these three instances are acts of discrimination:

(a) Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a female employee as against a male employee, for work of equal value;

(b) Favoring a male employee over a female employee with respect to assignment, promotion, employment benefits, training opportunities, study and scholarship grants solely on account of their sex or characteristics of her sex, whether actual or presumed; and

(c) Favoring a male employee over a female employee with respect to dismissal of personnel or the application of any retrenchment policy or the employer solely on account of their sex or characteristics of their sex, whether actual or presumed.

The proposed measure also seeks to amend Article 137, as amended, by revising the second prohibited act to “… discharge such woman on account of her pregnancy [,] or while on leave or while in confinement due to her pregnancy”.

The bill also added a fourth prohibited act which is “to deny any woman the benefits of employment or other statutory benefits under our laws by reason of her sex”.

It further added that any employer who commits or attempts in any manner to commit any of the acts prohibited under Article 137 or any rule or regulation issued pursuant thereto shall, in addition to other penalties as may be provided by law, upon conviction, be punished with a fine between P50,000 to P200,000 and/or suffer imprisonment of one to two years.

The conviction or acquittal obtained by the employer shall not be a bar to the filing by the female employee of a civil suit for the payment of salaries or benefits due her.

The measure also provides that any employee or person who willfully aids or abets in the commission of the acts prohibited in the law of those who causes the commission of any such acts shall be liable in the same manner as the employer.

Source: Manila Bulletin