More economic news & developments

According to the Institute for Development and Econometric Analysis, Inc. (IDEA) latest NewsBriefs, there is a decline in manufacturing output and trade drove down Gross Domestic Product (GDP) growth to 0.4% in the first quarter from a year earlier. The lackluster growth depended on the modest expansion in agriculture and personal consumption. The government would re-examine its full-year economic growth target of 3.1-4.1%.

Furthermore, the Bangko Sentral ng Pilipinas (BSP) cut its policy rates anew amid the possibility of the country falling into recession later this year. The officials, however, said that monetary action was not enough to buoy up the economy and should be accompanied by government policy to ensure that the Philippines avoided slipping into a recession. The 25 basis point reduction in key rates is a fresh 17-year low and the fifth consecutive reduction since December 2008. 

Likewise, the government’s debt servicing rose by 4.4% in the first four months from last year, as it hiked this year’s deficit program to fund projects that would spur economic activity amid the global economic turndown. Treasury Bureau data showed that the government paid a total of Php320.19 billion worth of debt from January to April, Php 13 billion higher than the Php306.69 billion in the same period last year. Value-Added Tax (VAT) collections for the first four months amounted to Php50.78 billion, 10% higher than last year’s Php46.2 billion, but below the Php57.76 billion target, Bureau of Internal Revenue (BIR) data showed. The collection gap was attributed to the global economic turndown which resulted in job losses and closures worldwide. Merchandise imports in March fell sharply by 36.2% from a year ago. The value of imports, in a decline since October stood at $3.269 billion as all commodities posted contractions except for cereals and cereal preparations amid global financial crisis. On a monthly basis, inbound shipments grew by 6.9% from February’s $3.06 billion.

Moreover, in efforts to lure foreign investments into the country, state agencies have agreed to draft a shared marketing strategy to boost inflows starting this year. The 2010-2014 Philippine Investment Promotion Plan, will be a two-part draft which contains tactics in times of crisis and in “regular times”. The crisis attuned part will be ready by August while the rest is expected to be completed by February next year. 

Lastly, the government allowed exporters to retain tax leeway even if they fail to ship out the required volume, due to dampened foreign demand amid the global economic crisis. The prevailing Investment Priorities Plan grants incentives such as income tax holidays to exporters as they sell 50% of their output abroad, 70% if the exporter is foreign-owned. 

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