Filipinos must not despair; this seems to be at the core of Bangko Sentral ng Pilipinas Governor, Benjamin Diokno’s message. According to the governor, the Philippine economy can hold up quite well compared to the other global economies.
The Philippine economy can still be one the fastest growing in the world in the fourth quarter, regardless of the global economic slowdown, the governor surmised.
According to Diokno, there is an anticipation that the fourth-quarter growth rate is strong.
There is an expectation that the economy could expand by around 6.4 to 6.5 percent in the fourth quarter.
Considering how the global economy is performing, the anticipated growth rates are too optimistic. However, Diokno said that the fourth-quarter growth of this pace is possible.
Fastest Against the Odds
The Philippine economy would be the fastest in the world amid a slowdown that seems to be synchronized across nations.
The statement is hardly baseless, though. The national economy already grew by 5.8 percent in the last three quarters.
On the other hand, the growth so far is lower than the 6 to 7 percent target range put out by economic experts for 2019.
In addition, the economy also posted a four-year low of 5.5 percent back in the second quarter.
Not that the BSP has not been acting to moderate or address the slower-than-expected GDP growth.
The BSP already slashed interest rates by a total of 75 basis points this year. Rates reached as high as 175 basis points in 2018.
The central bank was also compelled to lower the reserve requirement for banks. For the big and mid-sized ones, there was a reduction of 400 basis points.
Small banks saw their requirements deducted by 200 basis points.
Expectations Can Change
Not everything has been pessimistic, though. Inflation did not exceed the average set out by the BSP.
Inflation averaged 2.5 percent between January and November, even though BSP expected that it could increase to 4 percent.
Based on this, the BSP now has a new forecast. The Monetary Board expects to see inflation averaging 2.4 this year before going up to 2.9 in both 2020 and 2021.
Inflation will go up because of the volatility of global oil prices as well as the still unresolved African swine fever outbreak.
On the other hand, the uncertain trade arena, as well as continuous geopolitical tensions, will continue to be economic risks.
These expectations can change, though.
According to Diokno, new data will be in consideration when the Monetary Board would come together for a rate-setting meeting scheduled on December 12.
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