The year 2005 probably won’t be as good as last year for Philippine enterprises, especially with the rising interest rate regime, said the new chief of Bank of the Philippine Islands.
BPI president Aurelio Montinola IIII, in a recent briefing, said corporate profits were relatively good last year, as indicated by the resurgence of local stocks. But he was less bullish for this year, given the scenario of rising inflation and interest rates.
"Loan demand is going to be at best moderate," he said.
Higher utility charges and interest rates as well as new tax measures adopted by the government are seen affecting consumer demand. Montinola said a one-percentage point rise in domestic interest rates this year would be "manageable" but warned that a two-percentage point increase would be "difficult." "Hopefully, the maximum increase in interest rates this year will be 1.5 (percentage points)," Montinola said.
