Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo assured international investors that the Philippine economy remains resilient despite the range of global economic challenges impacting the region, including rising oil prices, inflation and pressure on emerging markets’ currencies.
Guinigundo said in a series of roundtable meetings at the sidelines of the 2018 IMF-World Bank Annual Meetings in Bali Nusa Dua, Indonesia that the Philippine government remained confident on the resiliency and potential of the economy.
“We are very confident in the underlying strength of our economy. The Philippines remains one of the best performing economies in the fastest growing region in the world,” Guinigundo said.
“GDP growth remains strong, FDI inflows are at record levels, infrastructure investment is booming, and we have historically low levels of public sector debt,” he said.
Guinigundo, asked on the threats posed by faster inflation to the booming economy, said the September data actually showed that core inflation had declined slightly, demonstrating that the BSP’s decisive monetary policy decisions combined with a range of non-monetary actions were starting to have their desired effect.
Inflation in September climbed to 6.7 percent from 6.4 percent in August, putting the average in the first nine months to 5 percent, above the target range of 2 percent to 4 percent earlier set by the BSP for the year.
Budget Secretary Benjamin Diokno said he was expecting inflationary pressures in the Philippines to temper over the coming year and return to the target band of 2 percent to 4 percent by 2019.
Guinigundo said the exchange rate movements of the peso were expected.
“When evaluating the strength of the peso, it’s important to look at the broader, global currency market. Compared against the currencies of our trading partners relative to inflation, the peso remains both stable and competitive,” Guinigundo said.
Guinigundo and Diokno led the closed-door presentations to potential investors over the course of the week.
The Philippines, as one of the best-performing economies in the world’s fastest growing region, is undergoing rapid growth and development because of its sound economic management, $180-billion infrastructure investment program, and resiliency.
The BSP said with one of the youngest populations in an increasingly aging world, the Philippines was on the cusp of reaping the benefits of a major “demographic dividend.”
Surveying the range of monetary and non-monetary measures being taken to temper inflation, Guinigundo said the BSP would sustain its vigilance with a strong tightening bias while maintaining a data-dependent approach.
He said numerous measures were in place to address supply-side factors such as the price of food, which the BSP and the national government agreed were the main factors behind the rise in inflation.
The briefing sessions also provided an opportunity to update international investors on the progress of the Philippines’ $180-billion ‘Build, Build, Build’ initiative. The once-in-a-lifetime nation-building program has gained considerable momentum over the last year, with 44 of the 75 largest projects already at the implementation phase, while 24 are at the development stage.