Growth slower than forecast Q3 result surprises but gov’t, analysts still expect full-year goal to be topped RESTRAINED state spending and a protracted dry spell put the brakes on third-quarter economic growth but the Philippines remains on track to exceeding this year’s target, the government yesterday said. Growth slowed to 6.5% in July to September, below the government’s 6.7-7.7% forecast. It was lower than the first quarter’s 7.8% uptick and an upwardly revised 8.2% for April to June. Offering a forecast of "moderate growth" of "around 6%" for the final three months of the year, Socioeconomic Planning Secretary Cayetano W. Paderanga said the full-year result would still be above the 5.0-6.0% target. Growth has so far averaged 7.5% in the nine months to September. Seasonally adjusted, the economy shrank 0.5% during the third quarter -- well below analysts’ forecasts of 0.9% growth and the second quarter result of 1.4%. The contraction was the Philippines’ first in six quarters and added to signs of a broader slowdown in Asia. After a strong finish to 2009 and start to 2010, Asian economies have lost momentum as export growth has slowed and the impact of government stimulus around the world fades. Data this week showed Thailand had slipped into a technical recession in the third quarter. Singapore’s export-driven economy shrank 18.7% in the September quarter, and growth has slowed in China, South Korea, Taiwan and Indonesia. Figures released yesterday showed Japan’s export growth slowed for the eighth consecutive month in October, raising the risk the economy could contract in the fourth quarter. The Philippines is one of the few Asian countries not to have raised rates since the global financial crisis, and the central bank said the growth data confirmed its stance had been appropriate. "The inflation forecast remains favorable so we can maintain interest rates for some time," Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. told reporters. A DOMESTIC debt exchange that seeks to swap shorter-dated papers for 25-year bonds has been approved by the president, a Cabinet official yesterday said. Finance Secretary Cesar V. Purisima told Malacañang reporters that President Benigno S. C. Aquino III had given the go signal for the swap, greenlighted last week by the Monetary Board. National Treasurer Roberto B. Tan now has "to execute the transaction," Mr. Purisima said. "This will be good for our capital markets because we will open up the market to longer tenor instruments and make the 25-year more liquid," he added. Asked about the amount involved in the swap, Mr. Purisima replied: "It really depends on the market. It’s up to Treasurer Tan to execute it. He has to execute it in a manner that is good for the country. If the pricing is favorable we do more. If the pricing is not favorable then we don’t do as much." Contacted by phone, Mr. Tan again declined to disclose the amount to be involved. "The amount for the swap is an aggregate amount, but I cannot divulge on it right now because we have not secured a copy of the approved [swap proposal]," Mr. Tan told BusinessWorld. "[The Treasury] is not saying that P60 billion would be the minimum amount to be swapped. We will announce the initial volume upon the launch of the swap," he added. |
Euro Snaps 3-Day Drop Versus Dollar as Weber Says Fund Will Be Adequate The euro strengthened against the dollar as European Central Bank Governing Council Member Axel Weber said the rescue fund for indebted nations is sufficiently capitalized to calm the region’s financial markets. Europe’s 16-nation currency rose for the first day in four against its U.S. peer after falling to a two-month low yesterday. The euro gained versus 12 of its 16 most-actively traded counterparts, rising for a second day against Japan’s yen. The benchmark Stoxx Europe 600Index rose 0.5 percent. U.S. markets are closed today for the Thanksgiving holiday. “Weber’s comments may have helped lift some of the gloom surrounding the euro,” said Jane Foley, senior foreign-exchange strategist at Rabobank International in London. “International investors may be looking at the bigger picture, seeing a very strong German economy, and they aren’t so bogged down in the euro monetary union story.” The euro gained 0.2 percent to $1.3360 at 5 p.m. in New York. It slumped to $1.3285 in New York yesterday, its weakest level since Sept. 22. It hasn’t declined for four consecutive days since Aug. 24. The euro appreciated 0.3 percent against the yen, rising to 111.69 yen from 111.40. Japan’s currency was at 83.60 per dollar from 83.54 yesterday.
Kim’s resignation was accepted by President Lee Myung Bak yesterday and a replacement will probably be announced today, according to a statement on the website of the presidential office. Kim had offered to resign in May after the sinking of the South Korean warship Cheonan in March, according to the statement. The decision was made “in an attempt to restore the discipline of the military in the wake of the latest development,” the statement said. South Korea’s Yonhap News agency said that Lee was “bowing to public pressure” after the minister was “accused of mishandling North Korea’s deadly artillery attack.” Tensions with North Korea have risen since the sinking of the warship, which killed 46 sailors. The Nov. 23 shelling of the Yeonpyeong island, which killed four and wounded 20, is the first of its kind since the 1950-1953 Korean War and spurred President Barack Obama to send an aircraft carrier to the Yellow Sea as a show of support and strength. South Korea will revise battle manuals and increase military strength on its maritime border, the presidential office said in a separate statement yesterday after an emergency Cabinet meeting. Military Alert Plans to reduce the number of marines on Yeonpyeong and four neighboring islands on the western side of the Korean peninsula will be scrapped, according to the statement. The nation has raised its military alert status to the second- highest level. The North Korean army’s Supreme Command, in a statement issued through the official Korean Central News Agency, accused South Korea of firing first in the Nov. 23 incident and warned of “merciless military attacks” if its territory is violated. China’s Foreign Ministry spokesman Hong Lei told reporters in Beijing it was evident that North and South Korea disagreed on which side started the clash. Premier Wen Jiabao has reiterated calls for stability on the Korean peninsula, without ascribing any blame to the North. Obama, Lee and Japan’s Prime Minister Naoto Kan have urged China to use its influence to temper North Korean acts of aggression. China is the regime’s main economic and political benefactor and the two countries fought together against United Nations forces during the Korean War. |
Crude Oil Trades Near a One-Week High After U.S. Jobless Claims Decline Oil rose to its highest in more than a week, extending yesterday’s gains as traders bet a larger- than-forecast decline in U.S. jobless claims signaled economic growth is accelerating in the biggest crude-consuming nation. Futures surged the most in four months yesterday after the Labor Department said applications for unemployment benefits fell to the lowest level since 2008 in the week ended Nov. 20. Oil prices at $100 a barrel would be “comfortable” for producing countries because they offset rising food costs, said Shokri Ghanem, chairman of Libya’s National Oil Corp. “Oil has established a new trading range between $82.50 and $89.50 as the demand side gets a little stronger,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “A lot of the strength today can be attributed to short-covering before the U.S. holiday.” Crude for January delivery rose as much as 67 cents, or 0.8 percent, in electronic trading on the New York Mercantile Exchange to $84.53 a barrel, the highest price since Nov. 16. The contract was at $84.25 at 5:59 p.m. London time. Brent crude for January settlement was up 25 cents at $86.09 a barrel on the London-based ICE Futures Europe exchange after rising to $86.50. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
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