By Lee C. Chipongian
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the six percent gross domestic product (GDP) growth for 2019 will be achieved as he expects fourth quarter GDP of 6.4-6.5 percent.
Diokno, a former budget chief, said the domestic economic condition is “looking good.”
“The Philippines is in a very nice place right now. Full year inflation is expected to be 2.4 percent, down from 5.2 percent last year. The fourth quarter growth rate is expected to be strong (6.4-6.5 percent), bringing full year growth rate at six percent, one of the fastest in the world, and amidst a synchronized global slowdown,” said Diokno.
With an unemployment rate down to 4.5 percent in October, which is the lowest since 2005, the BSP chief highlighted some 43.146 million Filipinos with jobs, up by 4.4 from 41.325 million in 2018.
“(The Philippine) poverty incidence sharply dropped from 23.3 percent in 2015 to 16.6 percent in 2018. That’s a monumental accomplishment,” said Diokno, noting the 5.9 million Filipinos that are no longer in poverty.
“Can you imagine how many more would have been lifted from poverty had the inflation rates been tamer in 2018? Inflation for the bottom 30 percent in 2018 was 7.2 percent. The national average was 5.2 percent,” he added.
On Thursday, December 12, the BSP’s Monetary Board, chaired by Diokno, will hold its final monetary setting meeting for 2019. The central bank has cut the benchmark rate by a cumulative 75 basis points (bps) this year, and also reduced banks’ reserve requirement ratio by 400 bps, translating to additional liquidity of about ₱400 billion.
During the Monetary Board’s November 14 policy meeting, while it lowered the 2019 inflation forecast to 2.4 percent, for the 2020 and 2021 inflation estimates, these were left untouched at 2.9 percent.
The Monetary Board said at the time that the prevailing monetary policy settings remain appropriate and that the benign inflation outlook and “firm” domestic economic growth outlook allows the BSP to keep rates steady at this time.
The GDP grew by 6.2 percent in the third quarter, higher than BSP’s assumption of 5.8 percent to six percent. In the first quarter, the GDP grew at a disappointing figure of 5.8 percent from 6.3 percent same time in 2018, while in the second quarter the GDP also slowed down to 5.5 percent.
The delays in the implementation of the 2019 national budget in the first three months of the year extended its impact to the whole of the first semester, dragging down growth. This prompted the BSP to cut policy rates in May, August and September to prop up GDP numbers.
Diokno said he expects growth to remain robust based on the “higher-frequency demand indicators (that) point to an overall positive outlook for the domestic economy” such as the composite Purchasing Managers’ Index and BSP’s own surveys, other indexes and forecasting methods.