THE Philippine economy is poised to see sustained economic growth moving forward amid global uncertainty brought about by trade and geopolitical tensions of key economies overseas, a central bank official said.
V. Bruce Tolentino, Monetary Board member at the Bangko Sentral ng Pilipinas (BSP), said the country’s fundamentals still point to a bullish economic outlook this year despite posting slower growth in the second quarter.
The slowing inflation and continued implementation of key infrastructure projects should prop up growth, the official told the Cebu business community at an appreciation event for BSP stakeholders in Cebu City Wednesday, Aug. 28, 2019.
“With our strong domestic economy, we can withstand any global challenges,” he said.
Trade tensions between Japan and South Korea have escalated after the former removed the latter from its list of preferred trading partners.
The world’s two biggest economies, the US and China, have also not resolved their trade dispute that has escalated further after both sides imposed more tariffs on each other’s exports.
These economies are important trading partners of the Philippines, and the trade wars among them are affecting as well the economies in the region, Tolentino said.
“If that gets worse, we will be affected,” he said, pointing out that the trade turmoil creates “a lot of uncertainty” in the global uncertainty.
“We produce commodities that these economies purchase. If their economies get into trouble, we also get into trouble,” the BSP official said.
But despite these uncertainties abroad, Tolentino was optimistic the Philippines would sustain its strong growth trajectory.
While the economy grew slower at 5.5 percent in the second quarter, he said this was still among Southeast Asia’s highest. The slower growth last quarter was dragged by the delay in the passage of the budget that hit state spending.
It was down from the 6.2 percent gross domestic product growth during the same period in 2018 and 5.6 percent in the first quarter this year.
“There are reasons to be optimistic. There is opportunity to raise that growth,” the central bank official noted.
For instance, he cited that inflation is now under control after hitting all-time highs in 2018 as the government rushed to implement reforms in the rice sector.
However, he pointed out the need for the government to “catch up” in its spending plans to boost growth, after the budget delay that dragged down the country’s economic performance.
The Philippines needs to grow by an average of 6.4 percent in the second half to meet its six to seven percent target for the full year.