Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Tuesday the country’s economic fundamentals remain strong after years of implementing structural reforms,
“The Philippine economy is much stronger now than before. Right now, our foreign debt is 30 percent foreign and 70 percent domestic, and we have hefty gross international reserves,” Diokno said during the Citi 2022 Virtual Macro Forum.
Diokno said the country’s strong fundamentals were built through decades of continued implementation of structural reforms and sound macroeconomic management.
He said it was important to strengthen economic fundamentals during periods of relative stability to develop buffers during times of crises. “Economies with strong fundamentals tend to handle crises better.”
Diokno cited the Philippines as a good example of an economy with sound fundamentals when the COVID-19 health crisis struck.
He said the economy entered the pandemic with healthy external accounts and hefty gross international reserves, which helped maintain relative order in the financial markets amid the crisis.
Diokno also said ensuring full economic recovery and maintaining long-term economic potential would require the implementation of recent economic reforms, such as the Corporate Recovery and Tax Incentives for Enterprises law and the amendments to the Foreign Investments Act, Public Services Act and Retail Trade Liberalization Act.
The Citi 2022 Virtual Macro Forum is a series of roundtable discussions with financial market participants structured around the IMF-World Bank Spring Meetings.
The pandemic caused a 9.6-percent GDP contraction in the Philippines in 2020, its worst performance since World War 2, because of the impact of the pandemic. The economy rebounded in 2021 with a growth of 5.7 percent, as the government gradually reopened its borders and business sectors amid the continuing massive vaccination program that boosted business and consumer confidence.
Data from the Philippine Statistics Authority showed that the recovery continued on the first quarter this year with an expansion of 8.3 percent, a sharp reversal of the 3.8-percent contraction a year ago.
Diokno earlier said the second-quarter growth might be stronger in the absence of COVID-19 surge during the period. The government earlier projected a GDP growth of 7 percent to 9 percent this year.
The BSP governor cited the country’s solid external position, strong banking system, manageable inflation environment, stable currency, investment grade ratings from global credit rating agencies, declining unemployment rate and sustained inflows of overseas Filipino remittances as the country’s strengths going forward.