October 18, 2019
THE Philippine economy should bounce back in 2020 from this year’s sluggish growth on the expected timely passage of next year’s national budget and the accommodative monetary policy of the central bank, an economist said on Thursday.
“If the 2020 budget is approved on time, and the Bangko Sentral [ng Pilipinas (BSP)] continues with [its interest] rate cuts, then we can expect the Philippines to return to its 6 to 7-percent growth path, maybe even faster [than] the original 7 to 8-percent growth target,” BPI Vice President and lead economist Emilio Neri Jr. said during an economic outlook briefing in Makati City.
The House of Representatives approved the proposed P4.1-trillion 2020 national budget last month and is being discussed at the Senate.
Meanwhile, the BSP implemented a combined 75-basis-point (bps) interest rate cut in May, August and September that brought overnight borrowing, lending and deposit rates to 4.00 percent, 4.50 percent and 3.50 percent, respectively.
Neri’s outlook was an improvement from his previous 5.9-percent gross domestic product (GDP) growth estimate this year. Economic growth in the first half stood at 5.5 percent.
His 2020 projection also compares to the government’s target range of 6.5 to 7.5 percent.
Despite his rosy outlook, Neri warned that the economy might continue to grow below 6 percent again next year if these four factors persist: stronger-than-anticipated global headwinds; tight domestic liquidity; slow manufacturing industry; and moderated corporate loan demand.
“In other words, if we can hurdle these four factors in the early and the latter part of 2020, then we should be back on track to 6 to 7-percent growth,” he said.
“But if not, then we’ll probably have to see another year of sub 6-percent growth for the Philippine economy,” the economist added.
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