Tetangco projects RP ‘09 growth at higher end of gov’t assumption

May 14, 2009 3:19 am 

MANILA, May 13 –- Improvement in the global financial markets have been encouraging and is seen to result to similar development in the Philippine economy.

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. on Tuesday noted that “financial markets have started to improve.”

“This is a good sign,” he said pointing out that this is an “indication market is seeing positive.”

Tetangco explained that emerging markets like the Philippines greatly benefit from improvements in the economies in major economies particularly the US during these trying times.

“There is increasing appetite for risks and therefore we’ve seen funds moving again to the emerging markets including the Philippines,” he said.

Investors’ risk aversion increased specially in 2008 because of the uncertainty in the global economic situation.

This risk aversion can be seen in among others foreign direct investments (FDIs).

In 2007, when the domestic economy posted its 31-year record growth of 7.3 percent, FDIs totaled to US$ 2.93 billion.

However, it declined to US$ 1.5 billion last year as a result of the global economic stress.

In the first two months this year, FDIs registered net inflows of US$ 29 million. This is lower than year-ago’s US$ 117 billion but the central bank said this is still positive given the current global economic crunch.

The BSP chief hopes that the reported positive developments in the US, which some people call “green shoots,' continue.

He explained that “if the green shoots blossom and not turn to weeds we would most likely see recovery in the major economies towards the end of the year or early 2010.”

The government’s growth assumption for this year is between a range of 3.1-4.1 percent, revised several times due to the volatilities in the global economic scene.

Tetangco said domestic consumption remains “buoyant” even as there are general projection of decline in remittances being sent by Filipinos abroad.

Monetary officials project a flat growth for remittances this year but with the opening of more opportunities for Overseas Filipino Workers (OFWs) in countries like Canada and those in the Middle East remittances is seen to remain resilient and will still power the economy’s growth.

Tetangco also noted that decline in exports have slowed down.

He said the government’s planned Economic Resiliency Program (ERP) is also eyed to boost the economy’s growth.

“We’re seeing a growth rate closer to the higher end of the range,” he added. (PNA)

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