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Thursday, July 25, 2024

GDP likely to expand up to 7.5% this year

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The Philippine economy has the chance to grow between 7 percent and 7.5 percent this year, driven by higher government spending, foreign direct investments and strong consumer demand, economists from First Metro Investment Corp. and University of Asia & the Pacific said Thursday.

The economists said in a news briefing in Makati City that sustained remittance inflows and revenues from business process outsourcing industry would continue to support economic growth in 2017.

Remittances and BPO revenues accounted for around $50-billion inflows annually. Remittances alone contributed 10 percent to GDP.

“The Philippine economy will continue to be robust and outperform its Asean peers in 2017. There will also be a lot of internal and external changes and threats that will impact the country’s economy but we are optimistic that given our sound macroeconomic fundamentals and compelling investment story, the economy will remain strong,” First Metro president Rabboni Francis Arjonillo said.

Prof. Bernardo Villegas of the UA&P said among the engines of economic growth were the young population, BPO sector, infrastructure, domestic tourism, skilled Filipino workers abroad and private-public partnership projects.

“We are very much in advantage because of our young and productive population. The BPO sector is one area of certainty,” Villegas said. 

The economy grew 7 percent in the first three quarters of 2016, at the upper bound of government’s target range of 6 percent to 7 percent. Professor Victor Abola of UA&P said the economy also likely expanded 7 percent in the fourth quarter.

BSP Governor Amando Tetangco Jr.

Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said the economy would continue growing this year despite the threats that could emanate from the external and domestic fronts.

Tetangco said in a speech during the Rotary Club of Manila meeting in Makati City that the economy would be able to weather 2017 relatively well despite “various surprises that are more surreal than those in 2016.”

He said risks this year could include the tentative growth trajectory of the global economy, the uncertainties brought about by the next moves of the Federal Reserve after it raised rates in December last year, political noise and adverse weather disturbances.

“Given the external headwinds, our defense system is reliable… Our flexible exchange rate policy provides us with a tested tool to shield the economy from temporary gyrations while our adequate reserves and sustained current account surplus fundamentally anchor our external position,” Tetangco said.

“Each of this is a corner stone that we stand upon. You can therefore conclude that the economy continues to enjoy a position of relative strength,” he said.

Tetangco said there was a need to implement the structural reforms in the pipeline including capital market reforms to unleash further productivity and enhance efficiency of financial intermediation.

“Our assessment now is that the current monetary policy settings remain appropriate. Thus, we don’t need to adjust in sync with Fed’s rate hikes,” Tetangco said.

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