The Group of 20 (G20) has set a goal of stepping up global economic growth but emerging markets such as the Philippines are expected to guard against excessive risk-taking as they pursue economic resilience.
The 20 largest economies of the world recently agreed to implement policies that aim to boost world gross domestic product (GDP) by more than $2 trillion over the next five years.
“Although there were no specific steps mentioned, the G20’s commitment to pursue growth should be positive for the Philippines. As they say, the tide should lift all boats. In the meantime, it is imperative that we keep our own house in order,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco said.
G20 is an international forum focused on strengthening the global economy, consisting of 20 member-countries including the European Union. The group represents 85 percent of global GDP, 75 percent of global trade and two-thirds of the world’s population.
The BSP governor said the government should carry on reforms intended to enhance productivity, improve the investment environment, and accelerate infrastructure spending.
Tetangco said the central bank will remain focused on its mandate of maintaining price stability so that growth may be realized in a low and stable inflation environment.
The country’s monetary authority will continue to be watchful of potential sources of volatility in financial markets during the G20 policy transition, Tetangco said.
“The G20 statement included a show of commitment from the AEs [advanced economies]to ‘carefully calibrate and clearly communicate’ monetary policy settings.
This should be market positive, including for EMEs [emerging market economies],” he added.
However, Tetangco said that this positive scenario “shouldn’t be license for liberal market-risk taking,” adding that markets should distinguish between economies that have kept their houses in order and those that have lagged.
Meanwhile, Finance Secretary Cesar Purisima welcomed the G20’s commitment, saying that the group’s policy transition is also important to emerging economies like the Philippines, as excessive volatility can hamper growth.
Purisima also appreciates the G20’s commitment to exchange tax information among countries, as it enables the government to run after companies that move profits across borders to escape taxation.
He explained that the Department of Finance estimates that 3 percent to 4 percent of Philippine GDP is lost to tax evasion.
“A Global Financial Passport will greatly curb tax evasion, fraud, bribery and corruption. This will assist both advanced and emerging economies in their pursuit of good governance,” Purisima said.