CITING solid macro-economic fundamentals, a top official from the Bangko Sentral ng Pilipinas continues to see strong growth prospects in the country’s economy.
Speaking before the Financial Executives Institute of Cebu Inc. (Finex)-Cebu on Tuesday, BSP Deputy Governor for Monetary Stability Sector Diwa Guinigundo assured that the country will continue to prove its position as a rising tiger in Asia amid concerns about overheating, high inflation, and domestic policy issues.
“The Philippine economy is in a position of strength to weather volatilities and uncertainties in the global market. Domestic sources of resilience allow us to sustain the alignment between positive economic growth and low inflation,” said Guinigundo.
The country grew 6.7 percent last year, just slightly slower than Vietnam (6.8 percent) and China (6.9 percent).
While January inflation hit four percent, the BSP official said it remains manageable and will eventually stabilize.
BSP has revised its inflation forecast to hit 4.3 percent this year, as the first package of the government’s tax reform program affects consumer prices and pushes up the price of fuel.
The BSP, however, predicts inflation to go back to 3.5 percent by 2019.
Guinigundo said the country continues to exhibit a strong growth momentum and that prices have remained stable while government finances remain manageable.
Moreover, the country is awash with liquidity to fund the momentum of growth and has enough buffers in the external sector of the economy.
“Amid external challenges, the current landscape provides plentiful opportunities for domestic and foreign investors alike. The Philippine economy offers sustainability and stability, hence, continues to be a viable destination for business and investments,” said the BSP official.
Filipinos, he said, can bank on the country’s healthy growth story with positive economic growth in the last 76 consecutive quarters or 19 consecutive years, a testament to how resilient the country is amid global and domestic pressures.
“There really is a basis for optimism,” Guinigundo stressed.
Meanwhile, he dismissed fears the economy is overheating. He said credit growth remains consistent with the expanding economic activity and credit expansion remains within the acceptable limits.
“There is a widespread demand for credit by all production sectors in the economy. Such credit as a percent of gross domestic product (GDP) remains low at 64.7 percent compared to China, Taiwan, Korea, Singapore, Malaysia, and Thailand,” he said.
Moreover, the BSP official stressed that the weakening of the Philippine peso against US dollar doesn’t reflect a bad economy.
The peso, according to Guinigundo, is on a flexible regime, which means that depending on market fundamentals, it can appreciate and depreciate. Exchange rates depend on the supply of the demand for US dollars.
“The weakening of the peso is not because the economy is bad but because the economy is good. People are producing, investing in foreign capital markets, building plants and factories and hiring, which means they buy dollars from the market,” he said. (KOC)