AskHello,
Since the Philippines got an investment grade, I keep hearing that its better to open a business because rates are lower, its better to get into the stock market, etc.
My question is, does it also have an effect on the current banking interest rates, specifically time deposits? Are time deposits a waste of money because we’re expecting an economic boom?
Tags: banking, interest, investment, rates
One Response to “What’s Philippines investment grade’s effect?”
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I think time deposits is not a waste of money, you’re just missing out on opportunities if you keep it there. Parang nakasakay ka sa tricycle papuntang Divisoria from Luneta, eh pwede ka namang mag-taxi.
Anyway, here’s an article I read about the investment upgrade at anong epekto nito sa masa:
An analyst says the effects of the country’s credit rating upgrade will not yet trickle down to the masses.
Maybank-ATR Kim Eng economist Luz Lorenzo explained the upgrade to investment grade is just some sort of formality since the Philippines has been paying lower interest rates for quite some time now due to a stable economy.
With the formalization of the credit upgrade, investors who do not pour in money in non-investment grade economies may now invest in the country.
And when they do or local companies borrow money to expand, according to Lorenzo, this will create jobs and this is where the ordinary people will start seeing the benefits of an investment upgrade.
“Magtitrickle siya eventually pero di agad mararamdaman,” Lorenzo said.
But Lorenzo also notes that in the same investment upgrade, Fitch pointed out the low per capital income of the Philippines.
Lorenzo says compared to other countries with the same investment grade level, the Philippines only has $2,600/annum per capita income while others have $10,300/annum.
According to Luz, simply said, the per capital income is the average income of the entire population and the Philippines’ low per capita shows that the rising economy has not yet trickled down the lower echelons of society or the common workers.
When asked if raising wages is the key, Lorenzo says salaries will eventually go up but it should go with higher productivity to complement the improving economic condition of the company.
Source: ABSCBN News