October 19, 2019
The country’s macroeconomic fundamentals remain strong despite growing uncertainty in the global environment, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said.
In his speech at a meet-and-greet session with the Philippine embassy and the US-Philippines Society in Washington, D.C. on October 16, Diokno said protectionist policies and geopolitical tensions continued to dominate the global growth narrative.
This, he added, resulted in the threat of slowing global economic growth becoming larger.
“Nonetheless, the Philippines remains on very sound footing because economic growth is solid and sustainable; inflation is low and manageable; the external payments position is strong; and the
banking system is strong and stable,” the central bank chief explained.
He also said the country recorded its 82nd consecutive quarter, or roughly more than 20 years, of uninterrupted economic expansion in the second quarter of 2019.
“This shows that we have managed to sail through the toughest external challenges from the Asian financial crisis to the global financial crisis,” he added.
Although slower than expected, Philippine gross domestic product (GDP) grew 5.5 percent in the second quarter.
Diokno also said the country’s inflation rate was now within target after posting successive multiyear highs that culminated in a 6.7-percent nine-year peak in September and October.
“This is credited to a series of monetary actions by the BSP that addressed brewing second-round effects combined with and non-monetary actions by the government that addressed bottlenecks to food supply,” he added.
In September, consumer price growth fell to 0.9 percent to bring the year-to-date average to 2.8 percent, which falls within the Bangko Sentral’s 2-4 percent target range.
Furthermore, the BSP governor said the country’s external position “is reflective of an economy driven by solid macroeconomic fundamentals and firm growth prospects.”
He cited, in particular, the country’s balance of payments position in the first eight months of the year, which posted a surplus of $5.5 billion after one of its components — the current account — registered a smaller deficit of $145 million in the April-to-June period.
Surplus payments drivers were the reliable inflows of overseas Filipinos’ remittances, net inflows of portfolio investments, foreign direct investments and the country’s dollar reserves.
Diokno said the Philippine financial system “remains sound and continues to effectively intermediate funds to productive sectors, thus promoting economic growth.”
The country’s banking system still demonstrates effectiveness and remained sufficiently capitalized, he added.
“In sum, the country has been making considerable progress toward achieving its macroeconomic goals. Looking ahead, prospects for the domestic economy continue to remain favorable as domestic growth fundamentals are expected to remain intact,” Diokno said.
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