BSP Economic Update (as of June 28, 2016)

Real sector 
Real GDP for Q1 2016 grew by 6.9%, higher than the 6.5% growth in Q4 2015 and the 5.0% growth in Q1 2015.  

  • Supply side:  Both the services and industry sectors continued to support domestic growth which expanded by 7.9% from 5.5% and to 8.7% from 5.3% a year ago, respectively. Meanwhile, the agriculture sector declined by 4.4% from a growth of 1.0% in Q1 2015.

  • Demand side: Capital formation grew by 23.8% from 12.5%, with particular increments from durable equipment (36.6% from 12.4%). Sustained government spending (9.9% from 0.2%) and increase in household consumption (7.0 % from 6.1%) also supported the 2016 Q1 GDP growth.

Monetary sector 

  • Inflation rose to 1.6% y-o-y in May 2016 from the 1.1% increase a month ago. The increase was attributed to higher prices of selected food and non-food items. Food items such as meat, fish, fruit, milk, cheese, and eggs as well as vegetables recorded price increases. Meanwhile, the rise in prices of some non-food items such as alcoholic beverages, cigarettes, and selected construction materials counterbalanced the negative inflation rate of electricity, gas and other fuels. Year-to-date average inflation rate at 1.3% was below the government’s 3.0% ± 1.0 percentage point target range for 2016.

  • Risks to future inflation:
    o        Upside risks:  pending petitions for power rate adjustments
    o        Downside risk:  slower-than-expected global economic activity

External sector 

  • Cash remittances from OFs for the first three months of 2016 reached US$8.7 billion, higher by 3.1% yoy. 

  • International reserves remain adequate at US$82.9 billion as of end-May 2016, albeit US$0.8 billion lower than the end-April GIR due to revaluation adjustments on the BSP’s gold holdings. The current GIR can cover 10.2 months’ worth of imports of goods and payments of services and income. 

  • External debt-to-GDP ratio went up slightly to 26.5% in Q1 2016 from 26.1% a year ago. 

  • On a year-to-date basis, the peso appreciated against the US dollar by 0.4% on 28 June 2016 as it closed at P46.90/US$1, moving in tandem with most Asian currencies except the Chinese yuan and Indian rupee, which depreciated vis-à-vis the US dollar.

  • Commodity prices: (in US$/MT)


May 2016

April 2016

% change (month-on-month)





Raw Sugar




                    *Source: World Bank Commodities Price Data released on 2 June 2016

Banking sector

  • Total resources of the banking system reached P12.4 trillion in December 2015, an increase of 2.0% from a month-ago, and by 7.6% from a year ago.

  • [No update] The banking system remains adequately capitalized. The CAR of U/KBs at end-September 2015 stood at 15.6% and 16.4% on solo and consolidated bases, respectively, higher than the BSP (10%) and BIS (8%) standards.

  • [No update] The gross NPL ratio of the rural banking system decreased to 11.25% as of December 2015 from 11.31% a quarter earlier.  Meanwhile, rural banks’ loan loss reserves stood at 68.1% of their gross NPLs as of December 2015, higher than the 65.4% in the previous quarter.