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Majority of chief executive officers (CEOs) in the Philippines are confident that their organizations will see revenue growth in the next 12 months, despite geopolitical uncertainties, a survey showed.

Results of the survey conducted by PwC Philippines in partnership with the Management Association of the Philippines (MAP) showed that 85% of 168 CEOs are optimistic that their companies will post revenue growth in the next 12 months.

The results of the survey, which ran from July 8 to Aug. 9, showed improved optimism compared with the 79% of 157 CEOs who said they were confident of topline growth last year.

Meanwhile, 86% of CEOs are confident of revenue growth in the next three years, slipping from 87% in the previous survey.

The survey also showed that 86% of the CEOs are confident about industry prospects for the next 12 months, higher than the 83% seen in the previous survey. This is the highest level of optimism since the pandemic.

“What helped drive optimism among our CEOs here in the Philippines is mainly our country’s economic growth,” said Karen Patricia A. Rogacion, deals and corporate partner at PwC, at a press briefing on Monday.

She noted the Philippines recorded faster economic growth despite geopolitical uncertainties, which have affected economies in the United States and Europe.

“When the year started, at the global level, we had a slow start. We are still feeling the impact of the Russia-Ukraine war as well as the impact of China’s real estate crisis,” she said.

“Several economies, such as the US and even Europe, were expecting a recession because of the high interest rates and unstable market conditions. In the Philippines, however, we showed fast growth,” she added.

The Philippine economy grew by 6% in the first six months of the year, hitting the low end of the government’s target of 6-7% this year.

In the survey, CEOs said infrastructure development, domestic consumption, and foreign direct investments are the main drivers of growth in the next 12 months.

“Given the top three drivers, it’s also been consistent that the CEOs say that our government is doing a good job in pushing for infrastructure development, forging stronger relationships with other nations, and also managing inflation,” Ms. Rogacion said.

However, 62% of the CEOs said geopolitical uncertainties arising from the Russia-Ukraine war, conflicts in the West Philippine Sea, and upcoming elections in other countries are keeping them awake at night.

“We have actually been indirectly and directly affected by challenges due to global supply chain pressures, inflation, and other related threats,” she said.

Donald L. Lim, chair of the MAP CEO Conference Committee, said CEOs fear geopolitical uncertainties as these may suddenly disrupt supply chains and operations.

“I think the geopolitics, whether Ukraine-Russia or even the West Philippine Sea, are a great unknown. We don’t know what will happen. But if that happens, it will have a severe impact on the business,” he added.

However, Roderick M. Danao, chairman and senior partner of PwC, said that some companies are already starting to manage and mitigate the effects of geopolitical uncertainties.

“A few local companies have effectively tried to manage to mitigate the effect [through] product diversification, market diversification, and supply-chain diversification,” Mr. Danao said.

“Of course, all of these have to be backed up by long-term risk management plans for the company to adapt and to proactively manage the impact of the geopolitical conflicts,” he added.

TECHNOLOGICAL INNOVATION

Meanwhile, the survey showed that 46% of the CEOs believe that their company will no longer be viable after 10 years if it continues running on its current path.

According to PwC, new technologies such as generative artificial intelligence (GenAI) are set to revolutionize business models, redefine work processes, and transform industries.

“I always believe that AI will certainly bring more opportunities rather than threats,” said Mr. Danao.

In the survey, 40% of the CEOs said that they have already adopted the technology, while 71% believe that GenAI will change how their companies create, deliver, and capture value.

Even though 78% of the leaders believe that the technology can improve the quality of their company’s products and services, the survey also showed 61% of the CEOs said that they are not yet widely adopting the technology in their operations.

Asked why there is still low adoption, Mr. Danao and Mr. Lim said that AI in the Philippines is still in its nascent stage.

“The awareness is still very low at the Philippine corporate level. We are all excited about what this AI can bring into our organization. But embedding AI is still a work in progress. There will be investments and workforce upskilling needed,” Mr. Danao said.

“We are just at the tip of the iceberg. I think you’ll be lucky to have real AI adoption across the majority, meaning more than 50%, in five years. It will be a long time,” Mr. Lim said.

Mary Jade Roxas-Divinagracia, deals and corporate finance managing partner at PwC, said AI adoption will be led by industries like healthcare, banks, financial institutions, and retail.

“And then you have one of the major industries in the Philippines, the business process outsourcing, and this can be a game changer for them, not just on the risk side, but on the opportunity side as well,” she added.

However, Mr. Lim said that the full adoption of AI may result in job losses if the workforce will not be able to keep up.

“AI won’t replace jobs. Those people who use AI will replace those who do not know how to use it. So, I think the problem is more on education because the teachers do not understand this,” he said.

“So, we have to make sure that the educational system prepares our next three batches of graduates to use and harness AI. Will there be a loss of jobs? I think there will be. Because it won’t be able to catch up,” he added. – Justine Irish D. Tabile, Reporter

Philippine banks’ asset quality worsened in July as the industry’s gross nonperforming loan (NPL) ratio rose to its highest in over two years.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed the banking industry’s gross NPL ratio went up to 3.58% in July from 3.51% in June and 3.43% a year ago.

This was the highest bad loan ratio in 25 months or since 3.6% in June 2022.

Data from the BSP showed that soured loans increased by 1.13% to PHP 508.11 billion as of end-July from PHP 502.42 billion a month earlier. Year on year, bad loans jumped by 15.46% from PHP 440.07 billion.

Loans are considered nonperforming once they remain unpaid for at least 90 days after the due date. These are deemed as risk assets since borrowers are unlikely to pay.

The loan portfolio of Philippine banks slid by 0.78% to PHP 14.21 trillion as of end-July from PHP 14.32 trillion at end-June. However, it increased by 10.79% from PHP 12.82 trillion a year ago.

Past due loans rose by 1.88% to PHP 625.71 billion in July from PHP 614.17 billion a month earlier. Year on year, it increased by 18.37% from PHP 528.62 billion.

This brought the past due ratio to 4.4% in July, higher than 4.29% in June and 4.12% a year ago.

On the other hand, restructured loans stood at PHP 291.08 billion in July, down by 0.86% from PHP 293.62 billion in June. Year on year, it fell by 4.47% from PHP 304.71 billion a year ago.

Restructured loans accounted for 2.05% of the industry’s total loan portfolio, steady from a month ago but lower than 2.38% in July 2023.

Banks’ loan loss reserves inched down by 0.05% to PHP 479.24 billion in July from PHP 479.46 billion in June but rose by 6.44% from PHP 450.24 billion a year ago.

This brought the loan loss reserve ratio to 3.37%, slightly higher than 3.35% last month but lower than 3.51% a year ago.

Lenders’ NPL coverage ratio, which gauges the allowance for potential losses due to bad loans, slipped to 94.32% in July from 95.43% in June and 102.66% in July 2023.

The higher NPL ratio in July can be attributed to elevated borrowing costs, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The NPL ratio for Philippine banks reached 3.58% in July, a two-year high likely due to factors like post-pandemic recovery challenges, rising interest rates, and sector-specific issues,” Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.

The BSP had kept its policy rate at an over 17-year high of 6.5% from October 2023 to July 2024. At its August meeting, the Monetary Board cut its policy rate by 25 basis points (bps) to 6.25%.

“Furthermore, the latest pickup in banks’ NPL ratio may also be a function of faster loan growth in recent months, meaning the faster expansion in banks’ loan portfolio also partly corresponds to some pickup in NPLs as well, so it is very important to have tight and uncompromising credit/lending standards to curb NPLs to as minimal as possible,” Mr. Ricafort said.

Outstanding loans of universal and commercial banks rose by 10.4% year on year to PHP 12.14 trillion in July from PHP 11 trillion a year ago. This was the fastest loan growth in 19 months or since the 13.7% logged in December 2022.

For the rest of the year, Mr. Ricafort said rate cuts by the US Federal Reserve and the BSP would lower borrowing costs for consumers and businesses.

“(This) could also help boost economic growth and other business activities, thereby could lead to some improvement in borrowers’ ability to pay that helps ease NPL ratio and overall asset quality of banks,” he said.

Mr. Ravelas said he is “cautiously optimistic” on the outlook for banks.

“However, with improved economic conditions, accommodative measures from the BSP, and strengthened risk management by banks, the outlook for asset quality is cautiously optimistic for the rest of the year,” Mr. Ravelas added.

BSP Governor Eli M. Remolona, Jr. previously said the central bank could cut rates by another 25 bps within the year. The Monetary Board’s last two policy-setting meetings this year are on Oct. 17 and Dec. 19. — Aaron Michael C. Sy

The Philippines remained the most disaster-prone country for the 16^th straight year, as it continues to face extreme natural events like typhoons, earthquakes and droughts.

In the latest World Risk Index, the Philippines’ risk score inched up to 46.91 this year from 46.86 last year.

A country’s score is measured based on its exposure to disasters as well as vulnerability to its effects. A score of 100 means a country has a “very high risk” while zero suggests otherwise.

The World Risk Report, published by Germany-based Bündnis Entwicklung Hilft and the Institute for International Law of Peace and Armed Conflict at Ruhr University Bochum (IFHV), assesses the disaster risk for 193 countries using 100 indicators.

The Philippines, which faces an average of 20 typhoons every year, has topped the World Risk Index since 2009.

“In 2024, the risk hotspots remain in the Americas and Asia, hosting eight of the 10 countries with the highest risk scores. Over the long term, however, these hotspots will shift to countries with climate-sensitive exposure and high vulnerability,” the report said.

Indonesia ranked second in the index with a score of 41.13, followed by India (40.96), Colombia (37.81) and Mexico (35.93). The rest of the top 10 included Myanmar (35.85), Mozambique (34.44), Russia (28.12), Bangladesh (27.73), and Pakistan (27.02).

Global disaster risks are also closely linked to poverty and inequality, the report said.

“This persistence often results from robust interactions between increasing vulnerability and damage caused by extreme events. Countries with climate-sensitive exposure and high to very high vulnerability are particularly at risk. These countries can expect more frequent and more intense extreme natural events and damage in the future,” it said.

In terms of exposure to disasters, the Philippines ranked fourth with a score of 39.99. China had the highest exposure (64.59), followed by Mexico (50.08), and Japan (43.67). A high score means a country is most exposed to drought, earthquakes, tsunamis, cyclones, coastal and riverine flooding, and rising sea levels.

“Climate change is increasing the frequency and intensity of extreme natural events, leaving less and less time for regeneration. As soon as one disaster is overcome, the next threat is already looming,” the report said.

The Philippines also had “very high” scores in terms of vulnerability (55.03), susceptibility (51.16), and lack of coping capacities (58.07).

“Extreme weather events, conflicts and pandemics overlap and amplify each other. Global trends such as climate change, population growth and political polarization promote multiple crises and intensify their effects,” the report said.

For instance, the Philippines was hit by 22 typhoons during the coronavirus disease 2019 (COVID-19) pandemic, including Supertyphoon Rolly (international name: Goni) which was considered one of the strongest ever.

“Hundreds of thousands of destroyed homes, overcrowded evacuation centers and the resulting increase in COVID-19 cases not only led to a dramatic increase in humanitarian needs, but also had a negative impact on the mental health of the population,” the report said.

Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said the Philippines’ tight fiscal space has affected risk mitigation measures.

“While government has disaster and climate bodies which craft policy relating to adaptation and mitigation measures to address disaster and climate risks, government offices have not yet done enough to actually implement climate resilient programs and projects,” he said in a Viber message.

“A particular reason for this is our limited fiscal space, in which fundamental social services and infrastructure are the most important spending priorities.”

Typhoons may have cost the Philippine economy around $20 billion in gross domestic product losses from 1990 to 2020, the Asian Development Bank said in a 2021 report.

The Philippine government should come up with ways to make its key projects or programs more climate-responsive or climate-resilient, Mr. Ridon added.

Leonardo A. Lanzona, who teaches economics at the Ateneo de Manila University, said the Philippines has a high risk of disasters due to its vulnerability to climate change.

“If institutions are strong, there are ways of mitigating the effects of extreme weather conditions in the country. Climate is one significant challenge we face, and our institutions are powerless in protecting our properties and lives. I am thinking of corruption, and flood control funds can be diverted into their interests,” Mr. Lanzona said. — Beatriz Marie D. Cruz

The Bangko Sentral ng Pilipinas (BSP) aims to shift to an enhanced macroeconomic forecasting model by next year that will help in the formulation of monetary policy, officials said on Monday.

The BSP will adopt the Policy Analysis Model for the Philippines (PAMPh) for determining the path of monetary policy, which was made in partnership with the International Monetary Fund’s Institute for Capacity Development and the Japan International Cooperation Agency.

“The shift to conditional forecasts as a key input to monetary policy formulation is in line with best practices in inflation targeting central banks. Specifically, by representing the key economic gaps in the Philippine economy, the PAMPh allows a systematic, internally consistent, and economically coherent analysis of current and future economic conditions that will guide monetary policy formulation in the BSP,” BSP Department of Economic Research (DER) Economic and Financial Forecasting Group Deputy Director Dennis M. Bautista said at a briefing on Monday.

“Conditional forecasts will take the BSP in communicating current decisions and more importantly, the probable path of policy decisions helping to anchor inflation expectations,” he added.

The BSP will be shifting from its current multi-equation model (MEM) and single equation model (SEM).

The PAMPh generates a suggested policy path that Monetary Board members may use when making policy decisions. The previous models only forecast the inflation rate over a decided time frame based on a fixed policy rate.

“I think the key limitation is that the multi-equation model assumes a constant interest rate over the policy horizon,” BSP DER Director Dennis D. Lapid said. “So, this current model (PAMPh) ensures that when we give out a path for future inflation, it will have a corresponding path for not just GDP (gross domestic product), but also the policy interest rate along with it.”

The BSP will not disclose the policy paths forecasted by the PAMPh, and they will be for internal use for now, he added.

Mr. Bautista said the PAMPh uses 290 equations, while the MEM uses 24. The PAMPh also considers more sectors to see inflation drivers and other economic imbalances.

“The MEM has very good forecasting and performance but when you compare the two, the PAMPh considers more details of the economy. So, it can be used to address more, plus gives more explicit input on the monetary policy stance. It’s producing an entire path of the policy rate,” BSP Deputy Governor Francisco G. Dakila, Jr. said.

Mr. Bautista said the BSP will not be abandoning the old model but will use it along with the PAMPh.

“The MEM will then be one of the so-called satellite models. The PAMPh is quarterly because many of the variables are available only quarterly. But you need more detailed information on the development of inflation on a higher frequency basis, so that means you need a lot of so-called satellite or complementary models. The MEM will be one of them because it produces forecasts of inflation in the near term,” Mr. Dakila added.

University of the Philippines Los Baños Economics Senior Lecturer Enrico P. Villanueva said in a social media message that the main difference between the old and the new models could be better inflation forecasts.

“The past few months or year, their forecasted range of inflation, although a bit wide in range, normally captured the actual inflation figure,” he said.

“Due to the inherent difficulty of capturing and forecasting levels of economic variables, my suggestion is actually to temper the model’s output using expert judgment,” Mr. Villanueva added. “While macroeconomic modeling through graphical depiction is a doable and practical undertaking, its translation into mathematical or econometric models to be used in forecasting is not tractable. Econometric forecasting models are typically laden with assumption and oversimplification of complex real-life relationships among variables.” — AMCS

Private sector economists trimmed their inflation expectations for this year and the next two years, with the majority expecting the consumer price index (CPI) to fall within the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target range until 2026.

The BSP’s Monetary Policy Report from its August meeting showed the analysts’ forecasts continued to move closer to the midpoint of the 2-4% target range.

The BSP’s survey of external forecasters (BSEF) for August showed that the mean inflation forecast was cut to 3.5% for this year from 3.7% in the May survey.

The inflation forecast for 2025 was trimmed to 3.1% from 3.5% in the May survey.

Likewise, analysts cut the 2026 forecast to 3.2% from the 3.4% projection in May.

“Risks to the inflation outlook are broadly balanced, with local inflation expected to trend lower for the rest of the year,” the BSP said. “Downside risks to the inflation outlook are seen to stem largely from lower rice prices, following the implementation of Executive Order (EO) No. 62.”

President Ferdinand R. Marcos, Jr. issued EO 62, which reduced tariffs on imported rice to 15% from 35% until 2028 to lower prices of the staple. The order took effect in July.

“Analysts also anticipate downward inflationary pressures from a stronger peso against the US dollar, as well as favorable base effects,” the BSP said.

The local unit closed at PHP 55.905 per dollar on Friday, strengthening by 30.5 centavos from its PHP 56.21 finish on Thursday, Bankers Association of the Philippines data showed. This was the first time the peso hit the PHP 55-per-dollar level in almost six months or since its PHP 55.58-a-dollar close on March 18.

Year to date, the peso has depreciated by 53.5 centavos from its PHP 55.37-a-dollar close on Dec. 29, 2023.

“Meanwhile, the main upside risk is expected to arise from second-round effects, such as higher electricity costs brought about by a potential uptick in oil prices amid geopolitical conflicts,” the BSP said.

At the same time, the BSEF showed most analysts expect inflation to remain within the 2-4% target until 2026.

“Compared to the July survey, the August probability distribution for 2024 remained narrow and within the target range. The probability distribution shifted slightly to the left for 2024-2026, indicating a strong likelihood that inflation will stay well within the target range,” the BSP said.

Forecasts provided by 18 out of 23 respondents showed an 86.4% chance that inflation will remain within the 2-4% target range for 2024. However, this was lower than the 87.2% recorded in July.

On the other hand, analysts estimated a 12.5% chance that inflation will surpass the target range, up from 12%.

Meanwhile, the probability of inflation staying within the target range for 2025 decreased to 80.6% from 84.3%.

Expectations of inflation staying within target for 2026 likewise slipped to 82.7% from 86.8%.

The BSEF also showed that most analysts see the BSP cutting rates by another 25 basis points (bps) in the fourth quarter, bringing the total amount of rate cuts for the year to 50 bps.

“Moreover, they expect the BSP to lower the rate by 50-250 bps in 2025, with additional cuts of up to 100 bps by the end of 2026,” it said.

Last month the Monetary Board cut its policy rate by 25 bps to 6.25% from 6.5%.

BSP Governor Eli M. Remolona, Jr. previously said the central bank could cut rates by another 25 bps within the year. The Monetary Board’s last two policy-setting meetings this year are on Oct. 17 and Dec. 19. — Aaron Michael C. Sy

The Philippines’ foreign exchange reserves rose to its highest level in over two years, mainly due to the increase in the central bank’s earnings from its foreign investments.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed that gross dollar reserves inched up by 0.18% to USD106.92 billion as of end-August from USD106.74 billion as of end-July.

“The month-on-month increase in the GIR (gross international reserves) level reflected mainly the net income from the BSP’s investments abroad,” the central bank said in a statement.

Year on year, the country’s dollar buffers rose by 7.39% from USD99.57 billion in August 2023.

The dollar reserves in August were also at their highest level in 29 months or since the USD107.3 billion in March 2022.

As of end-August, the level of dollar reserves was enough to cover about 6.1 times the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.

It was also equivalent to 7.9 months’ worth of imports of goods and payments of services and primary income.

Ample foreign exchange buffers shield an economy from market volatility and ensure the country can pay its debts in case of an economic downturn.

BSP data showed that foreign investments went up by 0.33% to USD91.41 billion as of end-August from USD91.11 billion a month ago, and by 8.65% from USD84.13 billion in the same month last year.

Reserves in the form of gold were valued at USD10.22 billion as of end-August, slipping by 0.88% from USD10.31 billion in the previous month and by 0.1% from USD10.23 billion a year ago.

On the other hand, net foreign currency deposits slipped by 4.4% to USD773.4 million from USD809 million month on month. However, this increased by 19.98% from USD664.6 million a year earlier.

Net international reserves as of end-August went up by 0.19% to USD106.9 billion from USD106.7 billion last month.

Net international reserves are the difference between the BSP’s reserve assets or GIR and reserve liabilities, such as short-term foreign debt and credit and loans from the International Monetary Fund (IMF).

The Philippines’ reserve position in the IMF increased by 0.83% to USD725.9 million as of end-August from USD719.9 million as of end-July. However, this was an 8.16% drop from USD790.4 million a year ago.

Special drawing rights, or the amount the country can tap from the IMF, rose by 0.2% to USD3.8 billion from USD3.79 billion last month. It also increased by 0.72% from USD3.77 billion last year.

“The continued increase in the GIR could be attributed to the continued increase in the country’s structural US dollar inflows such as overseas Filipino worker remittances, BPO (business process outsourcing) revenues, exports, foreign investments (foreign direct investments and foreign portfolio), among others,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

In the first half, cash remittances jumped by 2.9% year on year to USD16.25 billion.

Hot money yielded a net inflow of USD1.46 billion in the January-to-July period, surging by 830.7% from the USD157.3-million inflows in the same period a year ago.

In the January-to-May period, net inflows of foreign direct investments jumped by 15.8% year on year to USD4.024 billion.

“For the coming months, GIR could still increase due to proceeds of the National Government’s USD2.5-billion global bond issuance in the latter part of August 2024, and the remaining USD500-million global bond issuance programmed for the rest of 2024,” Mr. Ricafort said in a Viber message.

Last month, the government raised USD2.5 billion from a three-tranche US dollar-denominated global bond offering. In May, USD2 billion was raised from the issuance of global bonds.

The government has yet to borrow USD500 million out of the total USD5-billion borrowing plan for this year.

The BSP expects the GIR level to settle at USD104 billion by yearend. — Beatriz Marie D. Cruz

 

Rice inflation may further cool in the coming months once India relaxes a ban on exports, analysts said.

“India may reconsider its export ban, impacting international prices further. The stronger peso will also make imports cheaper, easing inflation further,” Union Bank of the Philippines, Inc., Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

Market participants are anticipating that India, the world’s top rice exporter, could soon ease export restrictions on rice.

Last year, global rice prices spiked after India suspended exports of non-basmati white rice.

Headline inflation eased to 3.3% in August from 4.4% in July due to the slower rise in food and transport costs, the Philippine Statistics Authority (PSA) said last week.

In August, rice inflation slowed to 14.7% from 20.9% a month earlier. This was the lowest rice inflation since the 13.2% print in October last year.

Rice was the top contributor to the August inflation basket, accounting for 32.7% or 1.1 percentage points.

National Statistician Claire Dennis S. Mapa has said rice inflation is expected to fall to a single digit in September due to base effect.

It could be recalled that the consumer price index (CPI) for rice first hit double digits in September last year at 17.9%.

However, the effects of the recent Typhoon Enteng as well as higher oil prices may stoke rice inflation, Security Bank Corp. Chief Economist Robert Dan J. Roces said.

“Rice inflation falling to a single digit in September is possible, but it may be difficult to say for sure at the moment with the extent of the recent typhoon damage,” he said in a Viber chat.

Agricultural damage brought by Typhoon Enteng has risen to PHP 659 million, the Department of Agriculture said over the weekend.

“We must remain vigilant of global factors like oil prices and domestic challenges like the impact of typhoons on rice supply, as these could affect future inflation,” Mr. Roces added.

Last week, the Organization of the Petroleum Exporting Countries and their allies including Russia agreed to delay its oil output increase to October and November as crude prices fell to a nine-month low, Reuters reported.

PSA’s Mr. Mapa also noted that the lower tariffs on rice imports have yet to significantly bring down retail prices.

In the last 45 days, the prices of regular and well-milled rice per kilo dropped by an average of 30 and 40 centavos respectively, PSA data showed.

“It’s slow, but we hope to see bigger drops in the coming months,” Mr. Mapa said.

In June, President Ferdinand R. Marcos, Jr. reduced the tariff on rice imports to 15% from 35% until 2028 to tame rice prices.

While the tariff cuts are expected to bring down rice prices, its effects may not be felt by most households, said Ateneo de Manila University economics professor Leonardo A. Lanzona.

“The expected effects of reduced tariffs are concentrated on premium quality rice which the public seldom buys. These types of rice are now relatively cheaper but still more expensive than the locally produced variety consumed by the majority,” he said in a Facebook Messenger chat.

The average price of a kilo of regular milled rice fell to PHP 50.66 in August from PHP 50.90 a month earlier, while well-milled rice prices declined to PHP 55.56 from PHP 55.85, data from the local statistics agency showed.

MORE RATE CUTS

Meanwhile, the Monetary Board is expected to continue with its easing cycle amid the slower inflation in August.

“The recent drop in Philippine inflation, especially rice prices, is a promising sign that our monetary and fiscal policies are working. This should pave the way for more interest rate cuts,” Mr. Roces said.

Mr. Asuncion said they now expect a 25-basis-point (bp) cut in October, and “a probable 1-2% reduction of the RRR (reverse repurchase rate) toward the end of 2024.”

The Bangko Sentral ng Pilipinas (BSP) cut policy rates by 25 bps at its Aug. 15 meeting, bringing the benchmark rate to 6.25% from 6.5% previously.

BSP Governor Eli M. Remolona, Jr. has signaled another 25-bp cut before the year ends. The Monetary Board has two remaining rate-setting meetings this year, on Oct. 17 and Dec. 19. – Beatriz Marie D. Cruz, Reporter