BSP Economic Update (as of November 3)

Real sector

  • Real GDP for Q2 2015 grew by 5.6% from 5.0% in Q1 2015 (albeit lower than the 6.7% growth a year ago) due to accelerated consumer and government spending as well as increased investments, particularly in construction.

  • Supply side: Services sector continue to drive growth (6.2% yoy), supported by the following sub-sectors: real estate, renting and business activities (6.8%); trade and maintenance of motor vehicles, motorcycles, personal and household goods (6.1%); transport, storage & communication (5.9%); and financial intermediation (5.8%).

  • Demand side: The main drivers of grown were the robust performance of household consumption (6.2%), expansion of capital formation (17.4%), particularly construction (13.1%), and faster government spending (3.9%).

Monetary sector

  • In September 2015 inflation decelerated further to 0.4% from 0.6% in August. This was attributed mainly to lower prices of selected food items (rice, corn, oils and fats as well as other key food items such as fish, fruits, milk, cheese, and eggs) due to adequate supply. Likewise, non-food items (electricity, gas, and other fuels) decreased due to lower generation charges for household electricity rates and price rollbacks of domestic petroleum products.

  • Year-to-date average inflation rate of 1.6% was at the lower end of the government’s 3.0% ± 1.0 percentage point target range for 2015-2016. The government also approved an inflation target range of 3.0% ± 1.0 percentage point for 2017-2018.

  • Risks to future inflation continue to be broadly balanced. While latest baseline inflation forecasts have shifted further downward to average lower than target for 2015, it is expected to continue to be within the target range over the remainder of the policy horizon.

    • Upside risks: impact of stronger and protracted El Niño on food prices and utility rates as well as pending petitions for power rate adjustments.

    • Downside risk: weak global economy and continued uncertainty in global financial markets.

External sector

  • Personal remittances from OFs for January-August 2015 reached US$17.9 billion, higher by 3.9% yoy.

  • International reserves remains adequate at US$80.6 billion as of end-September 2015, which could cover 10.3 months’ worth of imports of goods and payments of services and income.

  • External debt-to-GDP ratio declined to 25.7% as of end-July 2015 from 28.7% in the same period last year.

  • On a year-to-date basis, the peso depreciated against the US dollar by 4.5% on 30 October 2015 as it closed at P46.82/US$1, moving in tandem with other Asian currencies.

  • Commodity prices: (US$/MT)


Sept. 2015

Aug. 2015

% change (month-on-month)





Raw Sugar




*Source: World Bank Commodities Price Data released on 2 October 2015

Banking sector

  • Total resources of the banking system declined slightly by 1.5% to P11.4 trillion as of end-March 2015 from a quarter-ago, but increased by 8.7% from the year-ago level.

  • The banking system is also adequately capitalized. The CAR of U/KBs at end-March 2015 stood at 15.07% and 16.10% on solo and consolidated bases, respectively, higher than the BSP (10%) and BIS (8%) standards.

  • The gross NPL ratio of the rural banking system decreased to 11.68% as of June 2015 from 11.92% a quarter earlier. Meanwhile, rural banks’ loan loss reserves stood at 62.0% of their gross NPLs as of June 2015, higher than the 57.4% in the previous quarter.