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The Philippines is no longer “Asia’s stray cat” but an economic tiger, according to Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo.
 
Speaking in a forum organised by BloombergMr. Guinigundo said this became possible through the “sweet convergence of high growth and low inflation.”
 
“We are now in the middle of a very significant time in our nation’s history where the Philippines is beginning to shed its image as ‘Asia’s stray cat.’ The country is now joining the rest of the pack of Asia’s emerging tiger economies as the region leads the world in terms of economic growth. This cat is beginning to let the world hear its mighty roar,” Mr. Guinigundo said.

Manufacturing holds key to the economic progress of the Philippines, according to the Asian Development Bank (ADB).
 
ADB Chief Economist Changyong Rhee said no country has reached high-income status without reaching at least 18 percent share of manufacturing in output and employment for a sustained period.
The ADB said industrialization must be an essential part of the growth formula if Asian countries want to prosper and avoid the middle income trap.

The Philippines climbed 10 spots in the latest issue of the World Competitiveness Report prepared by the World Economic Forum (WEF), from 85th to 75th among 142 economies covered by a global poll of more than 14,000 business leaders.

"Up 10 places to 75th, the Philippines posts one of the largest improvements in this year’s rankings. The vast majority of individual indicators composing the GCI improve, sometimes markedly," said the Geneva-based WEF. "Yet the challenges are many, especially in the areas at the foundation of any competitive economy, even at an early stage of development."


The Philippines' gross domestic product (GDP) expanded by 4.0 percent year-on-year in the first half of 2011, with growth slowing to 3.4 percent in the second quarter from the revised 4.6 percent in the first quarter.  Sluggish government spending and fragile global economic recovery weighed down on the country's economic performance in the first six months of 2011.

The 4.0 percent growth in the first half was way below the government's gross domestic product (GDP) growth target of 7 to 8 percent for 2011.  "With a second quarter GDP growth of 3.4 percent and a revised first quarter GDP growth of 4.6 percent, the first semester GDP growth for this year is 4.0 percent.  To attain the 7 to 8 percent growth target for 2011, the economy needs to grow by at least 10.0 percent in the second semester," said SocioEconomic Planning Secretary Cayetano Paderanga Jr.

Fillipinos are saving and investing more this year despite the low interest rate, as banks introduced more products to attract depositors and investors who want to protect their wealth amid the global economic uncertainty.  Bangko Sentral ng Pilipinas (BSP) reported that total deposits placed in banks in the Philippines rose 8.5 percent to P3.7 trillion as of April 2011 from P3.4 trillion year-on-year.  "The continued growth in deposits reflected sustained depositor confidence in the banking system," Bangko Sentral said.

Savings deposits posted a 10.8 percent growth during the period and continued to account for nearly half of the funding base. Demand deposits expanded by 12.9 percent while time deposits posted a moderate growth of 1.3 percent.

Filipino companies and consumers in June 2011 borrowed money from banks at the fastest increase in 27 months, to support investment activities and the purchase of new homes and automobiles amid the continuous expansion of the economy.  Banco de Oro Unibank, Bank of the Philippine Islands, Metro Bank, and other universal and commercial banks extended a total of P2.59 billion to their borrowers in June, up by 18.8 percent from P2.18 trillion a year ago.

"The increase is the highest growth rate recorded since April 2009.  Likewise, outstanding loans of commercial banks inclusive of reverse repurchase facility accelerated at a faster rate of 20.5 percent from an expansion of 19.3 percent (revised) in May, to reach P2.8 trillion," said Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. 

August 2011. Five major banks in the Philippines have signed a partnership agreement with Chicago-based credit and information management firm TransUnion to establish the country's first international private credit bureau with an initial database of four million credit card users. "This is a milestone in Philippine banking.  This will have a positive impact on the banking sector," said Bank of the Philippine Islands (BPI) president and CEO Aurelio Montinola III.  

Montinola, who is also the president of the Bankers Association of the Philippines, said that with the activation of credit bureau, borrowers will gain access to credit facilities at competitive prices while financial institutions will be able to minimize their credit risks.  The new bureau, called Trans Union Information Bureau Inc., is the first private corporation established under the Credit Information System Act (Republic Act No. 9510) and is separate from the government's Credit Information Corp., which is supposed to be the central registry or central repository of credit information.

Bangko Sentral ng Pilipinas (BSP) is expanding its recent circular banning the use of the so-called flat interest by banks to include financing companies, pawnshops, insurance companies and even non-stock corporations to protect the Filipino consumers from excessive charges that sometimes represent double the interest they should pay.

"Right now, credit providers have different styles of computation of interest rates.  Some use flat interest, while others charge interest on outstanding balance.  The new requirement is that banks should compute interest based on the outstanding balance," Bangko Sentral Deputy Governor Nestor Espenilla Jr. said.

 


Bangko Sentral ng Pilipinas (BSP) is keeping its investments in US treasuries amounting to more than $20 billion, while continuously diversifying its investment portfolio, even after debt watcher Standard & Poor's downgraded by a notch the credit rating of the world's largest economy.

"For the Bangko Sentral, US treasuries will continue to be within the allowable investible universe for our reserves even with the one-notch downgrade by S&P.  Dips in the value of US treasuries would be compensated for by earlier diversifation moves," said Bangko Sentral Governor Amando Tetangco Jr.

The gross international reserves (GIR)  of the Philippines jumped by US$2 billion in July 2011 alone to hit a fresh record of US$71 billion, as Bangko Sentral raised its foreign investments abroad to balance the strong foreign exchange inflows into the country.  At $71 billion, these foreign exchange reserves have easily eclipsed the country's foreign debt of just US$61 billion, which makes the Philippines a net capital lender or exporter.

Data from the Bangko Sentral ng Pilipinas (BSP) show that the end-July forex reserves represented an increase of $21.9 billion or 45 percent year-on-year.  It has also exceeded the Bangko Sentral's year-end GIR target of $70 billion for 2011.