Overseas news
The US economy contracted by a 0.3% annualized rate last quarter, according to the US Commerce Department’s advance gross domestic product (GDP) report.
This marks the 1st decline in 3 years as businesses front-loaded imports to secure goods before the Trump administration’s tariffs take effect.
Economic growth is measured by tracking changes in the GDP, which is the value of everything a country produces in a given period.
Meanwhile, US manufacturing shrank further in April as tariffs disrupted supply chains, according to the Institute for Supply Management (ISM).
The ISM Manufacturing Purchasing Managers’ Index (PMI) fell to a 5-month low of 48.7, signaling continued weakness.
PMI is an index that shows if market conditions are seen as expanding (index over 50), staying the same (index at 50), or contracting (index under 50).
Local developments
The Philippines’ budget deficit rose 91.78% year-on-year in March to reach P375.7 billion. This was due to lower revenues and higher spending ahead of the election ban, said the Bureau of the Treasury (BTr).
A budget deficit is what happens when the government spends more than it earns. It can be lessened by increasing revenue (usually through taxes) and/or cutting spending.
Meanwhile, the trade gap widened to $4.13 billion in March, marking a 23% YoY increase and the biggest gap in 2 months.
The deficit also expanded 19.4% from $3.46 billion in February, according to data from the Philippine Statistics Authority (PSA). This happened as the growth in imports outpaced the increase in exports.
A trade deficit isn’t automatically a bad thing, as there are potential benefits, like satisfying demand that is higher than local production. It can also happen when the country experiences a high volume of foreign investments.
Additionally, the Bangko Sentral ng Pilipinas (BSP) expects inflation to settle within the 1.3% to 2.1% range in April. This could potentially mark a 3rd consecutive month of decline after inflation fell to a near-5-year low of 1.8% in March.
The projected rate also falls below or within the BSP’s 2- to 4% inflation target. The possible below-target inflation might give the central bank room to cut interest rates further.
The effects of US tariffs continue to unfold, but it might be too soon to tell what will happen the long-term. You may want to stay cautious and avoid big investing decisions as you wait for clearer signals.
