Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said the Philippines is in a better position, compared with other emerging markets, to sustain growth in the coming years because of solid macroeconomic fundamentals.
“While other emerging markets experience moderation in growth prospects and falter from the tough global headwinds, the engines of the Philippine economy are in good shape to create value,” Tetangco said in a speech at the luncheon meeting of the Rotary Club of Makati West in Makati City.
“The Philippine macroeconomy remains strong… The second-quarter GDP growth rate of 7 percent brings to 70 the number of consecutive quarters of positive economic growth. Such growth dynamics is supported by solid domestic demand, underpinned by strong private consumption and investment, continued productivity growth and favorable demographics,” Tetangco said.
He said inflation was low and stable, and inflation expectations continued to be well-anchored. Inflation rate averaged 1.5 percent in the first eight months, below the government’s official target range of 2 percent to 4 percent for 2016.
He also said the banking system was characterized by strength in balance sheets and profitability, serving as an efficient intermediator of funds in the economy.
“Our external position is likewise robust, with current account surpluses for 13 years now and our gross international reserves reaching $85.8 billion as of end-August,” Tetangco said.
He said most of the headwinds were of external origin, such as the subpar global recovery.
The International Monetary Fund said the global economy was projected to grow 3.1 percent in 2016, a downward revision to earlier forecasts.
Tetangco said there was a high uncertainty regarding the timing when the US Fed would continue its stalled normalization of monetary policy, in contrast to the continued accommodative policies of other major central banks such as the ECB and the Bank of Japan.
He said monetary policy divergence fostered an environment of volatility in capital flows, which could ultimately hamper global recovery.
“Further, the instability in commodity prices, in particular crude oil, also contribute to the uncertainty and fiscal pressures on oil-producing nations, which could eventually spillover to other economies via lower demand and investment. There are also salient non-economic risks, which further complicate the growth prospects. These include terrorism, political divisions within advanced economies, and armed strife,” he said.