EARLY in the second half of this year, what has come out in the country’s economic firmament is something that should warm the hearts of the country’s keen observers.

Some indicators of a developing dynamism have surfaced and these bode well for the country’s economic outlook in the second half of the year.

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First is the report that bank lending has gone up by 7.7 percent in recent weeks, to P2.3 trillion from P2.13 trillion of a year ago.


This means, as noted by the Bangko Sentral ng Pilipinas (BSP), that there has been consistent demand for credit. This translates further to consistently growing business activities, which has led to some 10.7 percent expansion of money supply.

Indeed, bank credit extended to production activities pushed the sector to a higher growth rate at 7.9 percent in May.

The BSP, however, allayed fears that the growing liquidity of the economy would lead to inflationary economic development. It said that the current situation would remain supportive of non-inflation.

On the other hand, the demand for money will continue to be strong under the prevailing economic environment, even if May’s increase was slower than April’s 12.4 percent rate.

Add to these positive economic developments the fact that the banks’ bad loans have gone down by a reported three percent to P86.78 billion in May, indicating that due to a perking up of the domestic economic scene, borrowers have turned to paying up their overdue bank loans.

This is a further indication of domestic business activities moving faster than previously expected at the end of 2009.


Finally, there is the $3.23-billion balance of payments surplus noted in the last six months. Net foreign exchange inflows surged to $502 million in June alone.

Earlier, the BSP reported that foreign remittances from January to May “amounted to $7.4 billion, up nearly 7 percent from the $6.98 billion in the same period last year.” This healthy level of external liquidity is supported by foreign capital inflows.

To top these all, central bank officials expressed the view that the Philippines’ level of “external liquidity gave comfort to bond investors that the country has the resources to meet its obligations despite uncertainties outside its borders.”