The Philippines is adjudged to have emerged from the pandemic on strong economic footing based on the preliminary assessment of a four-man visiting team from the International Monetary Fund (IMF).
But at the conclusion of the 12-day meet with government and private entities under Article IV consultations, the IMF also said the $404-billion southeast Asia economy has since since been confronted by a confluence of shocks that could ruin its plotted growth path.
“Nevertheless, the (visiting) team views that economic growth may bounce back by the end of the year with support from catching up of public spending, expansion of infrastructure investments, and improvement in external demand, and that the economy may potentially post even faster growth in 2024,” IMF team leader Jayanath Peiris said.
The assessment considered that local output growth measured as the gross domestic product (GDP) disappointed the country’s economic planners and market analysts alike who projected an expansion averaging at least 6 percent in the second quarter this year after having actually accelerated to 6.4 percent in the first quarter.
Instead, output growth in the second quarter averaged only 4.3 percent as domestic interest rates rise and price pressures mounted on supply-side disruptions and similar events.
The country’s second-quarter growth performance was the weakest in nine quarters of sustained expansion, according to data from the Philippine Statistics Authority (PSA).
Peiris lauded the monetary and fiscal authorities for taking prompt action to help mitigate price pressures, particularly on food inflation which has drastically risen to 9.7 percent in September this year, the fastest since February, from 8.1 percent in August and only 6.3 percent in July.
The Bangko Sentral ng Pilipinas (BSP) has since expressed the optimism that inflation will return to within-target levels towards yearend and that the seven-man policy-making monetary board is assessing whether any more policy adjustments are needed to help stabilize prices.
The BSP has been reluctant to wield the power to set interest rates as high as may be required given its indiscriminate impact on the lives of Filipinos regardless of whether one was a saver or borrower of money.
By appropriately setting the rate at which its borrows from or lends to banks, the BSP has the awesome power of making the lives of both households and businesses as cheaper or more expensive to conduct.
That power will manifest at the next rate-setting meeting of the BSP set for November 7 this year.
IMF team leader Peiris said the IMF has recommended a set of actions helping the monetary authorities address the risks to growth and inflation which are aligned with the BSP’s monetary and financial policy responses already in place. – Jun Vallecera
