Bangko Sentral ng Pilipinas Governor Benjamin Diokno assured the Americans and Filipinos living in the United States that the Philippines is on a solid economic footing despite an array of domestic and external headwinds that may stifle the further expansion of the economy.
Diokno said the prospects for the domestic economy continued to be favorable as domestic growth fundamentals remained intact.
“GDP expansion is expected to continue to pick up in 2019 due to the robust growth in the services and industry sectors. Private demand is expected to remain firm, aided mainly by sustained remittance inflows and stable inflation,” Diokno said in a speech during a meet-and-greet session with the Philippine Embassy and the US-Philippines Society in Washington D.C. on Oct. 16.
“As more government infrastructure programs get underway, the positive spillover effects on private capital formation would also contribute to economic growth,” he said.
He said from this position of strength, the Bangko Sentral remained committed to continually upholding the highest standard of excellence in crafting policies, and thereby achieve its primary mandates.
He conceded that the Philippine economy was not immune from risks arising from external factors. He said the global economic slowdown brought about largely by the US-China trade tension and growing protection affected most economies.
“But we are confident that the Philippines will be one of the least affected economies because its growth is based on strong domestic demand and the economy is not export-oriented,” he said.
“Many studies support this view that the Philippines will be one of the most resilient economies in this slowing and turbulent global economy,” he said.
He said the Philippines recorded its 82nd consecutive quarter or roughly more than twenty years of uninterrupted economic growth in the second quarter of 2019. This, he said, showed that the country had managed to sail through the toughest external challenges from the Asian financial crisis to the global financial crisis.
Diokno said that while the economy slowed to a four-year low of 5.5 percent in the second quarter, which brought the first-half average to 5.5 percent, below the target range of 6 percent to 7 percent for the year, many economists from the private and public sectors agreed that a strong recovery in the second half was expected as the government ramped up fiscal spending particularly on infrastructure projects. Julito G. Rada
Other strengths mentioned by Diokno are the continued easing of inflation rate, the country’s robust external position, strong foreign direct investments and a stable banking system.
“Our financial system remains sound and continues to effectively intermediate funds to productive sectors, thus promoting economic growth. The continued strong credit activities demonstrate the effectiveness of Philippine banks in their role as intermediator of funds in the economy,” he said.
He said banks remained sufficiently capitalized and past due ratios consistently declined over the years, giving banks greater ability to intermediate funds, manage risk and maintain profitability.
“The stability and soundness of the banking system is being supported as well by the financial sector reform agenda of the BSP focusing on areas such as banking supervision; cybersecurity and technology risk management; anti-money laundering; counter-terrorist financing; and capital market development,” he said.