News that matters for investment decisions.

Gross Domestic Product ( GDP )

The Philippine GDP grew by 5.4% in 2006. The economy got a boost from strong exports and dollar inflows from overseas workers. It just missed the 5.5% target of the government because of the series of typhoons that hit the country in the last quarter. The figure however is still better than the 5.0% growth of 2005

The contry's gross national product (GNP) also rose 6.2 %, as compared with 5.6% in 2005. GNP is GDP plus income earned abroad.


Budget Deficit

The Philippine government just announced that its budget deficit for 2006 stood at P62.2 billion ($1.27 billion) or 1.04 % of gross domestic product. According to the release, this is the third year in a row that it had outperformed annual target.

The figure was less than half of the P125 billion expected for the period.

The expected budget deficit for 2007 is P63 billion and by 2008 it is targetted to end nearly a decade of fiscal shortfalls in 2008.

* Source : Inquirer.net


One of the musts in investing is knowing the business condition andtherefore the investment climate. In this case the state of the Philippine economy is what matters first. Keep reading the business pages and watch our for the economic news that comes out. This will give us an idea how investment may perform and will guide us in our making decisions.

Since these news just came out, we start with them because in investing, it is important for the right information to get to the right people at the right time.

A positive and increasing GDP signifies growth in the economy. Generally, investing is better in a growing economy. The GDP growth posted was a modest one but signals an improving business climate. A target growth of at least 6.1 to 6.7% for 2007 was set.

If the government operates on a budget deficit, it needs to source fund to plug these shortfalls. They have to borrow abroad and thereby increase our foreign debt. They also crowd out local borrowers for available funds. These lead to to an increae in interest rates. Higher rates means higher costs of doing business.

Currently, local interest rates are low enough ( T-bills are just around 3.5% and three year bonds just above 5.%) to spur businesses to expand, banks to lend, buyers to purchase real estate and properties and excess liquid funds to buy in the stock market (now near its 10 year highs - PSEi closed at 3245.26 today).