Philippine Weekly Economic Recap: Sept. 17-21
Market-moving news for the week ended September 21, 2007:
US Federal Reserve cuts interest rate
The Federal reserve lowered its federal funds rate by half a percentage point or 50 basis points to 4.75% from 5.25% on September 18, 2007. The higher-than-expected rate cut by the Fed was intended to forestall the adverse effects on the economy arising from the tightening credit conditions.
RP deficit lower due to continuing budget surplus
For the third straight month, the government posted a budget surplus amounting to P13.9 billion in August. This brought the cumulative deficit incurred by the government for the first eight months of the year to P25.5 billion, lower than the P34.2 billion deficit posted in the same period last year. The surplus for the month was mainly due to the improved revenue collections of the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC), which increased by 12.5% and 14.7%, respectively, from the same month last year.
ADB raises Philippine GDP forecast
The Asian Development Bank (ADB) raised its Gross Domestic Product (GDP) forecast for the Philippines to 6.6% from 5.4% in 2007 and 6.0% from 5.7% in 2008. The improved outlook was due to the country’s stronger than expected economic growth for the first half of the year and the lower than projected inflation. For 2008, the ADB expects that growth will be sustained, albeit slower, driven by the growth of services sector and increase in consumption boosted by remittances.
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RP Balance of Payments reaches record high
The country’s Balance of Payments (BOP) for the month of August reached $2.2 billion from $359 million in the same month last year. For the first eight months of the year, the BOP surplus reached a record-high of $6.75 billion, exceeding the government’s full-year target of $6.3 billion. The strong BOP position is attributed to the continued growth in OFW remittances increased foreign investments and strong export performance.
Philippine peso grows stronger vs. US Dollar
The peso rose to its strongest in six weeks and ended the week by closing at P45.31 per dollar, higher by 2.1% or 0.99 cents from last week’s close of P46.30 per dollar. The robust performance of the peso during the week was attributed to the increased investor interest in emerging market assets following the US interest rate cut that eased concerns on global economic slowdown.
Source: Philippine Stock Exchange
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