The central bank continues to be upbeat about the Philippine economy, reminding an audience of business executives that the country’s sufficient money supply, manageable inflation, reliable banking industry and positive external position will continue to provide support for growth.
This message came from Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. during the Euromoney Philippines Investment Forum held at Makati City on Tuesday.
“Very broadly, we see the country continuing to grow in a stable inflationary environment. We believe liquidity is sufficiently calibrated and that it would support broad-based growth without fueling inflation, which we monitor particularly in view of policy normalization in the United States,” Tetangco stated.
The central bank governor said that the government’s gross domestic product growth target of 7 percent to 8 percent this year is attainable as domestic demand conditions remain firm and are supported by improving production efficiency and robust labor market dynamics.
The government target, however, is significantly higher than other recent forecasts, which estimate growth will fall below 7 percent. In its annual Asian Development Outlook released on Tuesday, the Asian Development Bank (ADB) forecast GDP growth for the Philippines to reach 6.4 percent this year and 6.3 percent in 2016.
Stable inflation, banking sector
Meanwhile, Tetangco said inflation expectations would remain well anchored as the latest inflation forecasts, based on surveys by the BSP and the Consensus Economics, remain close to the mid-point of the target band of 2 percent to 4 percent for 2015 to 2016.
On the banking side, Tetangco said that the industry will continue to be a reliable intermediator of funds in the country.
“Given the reform agenda, the system will continue to be characterized by solid asset growth, improved quality of loans and assets, strong capitalization, and better risk management practices,” he noted.
The BSP chief also said the Philippines’ external current account is seen to remain in surplus as exchange inflows from overseas Filipino workers’ remittances, business process outsourcing (BPO) revenues, as well as tourism receipts are expected to continue to grow.
Last year, the current account — a major component of the balance of payments — reached a record surplus of $12.6 billion.
“You may ask, will the Philippine economy be able to sustain its successive years of strong growth performance over the medium term? I believe so. Apart from the country’s strong fundamentals, the government’s commitment toward sustaining its structural reform agenda will lend critical support to achieving our growth potential,” Tetangco concluded.