Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said Tuesday the Philippines is on track to extend the 72 consecutive quarters of economic growth as macroeconomic fundamentals remain strong.
“Barring external shocks, we are on track to extend that streak [of 72 consecutive quarters of economic growth],” Tetangco said in a speech during the Management Association of the Philippines general membership meeting in Makati City.
Tetangco, however, said external challenges continued to threaten the economy, including the recent rate hike by the US Federal Reserve. “The prospects of higher interest rates in advanced economies may cause outflows in emerging market economies, including the Philippines. The Philippines has actually seen capital reversals as early as last year,” Tetangco said.
Tetangco said he was expecting the manageable inflation environment, strong banking sector, robust external position and domestic demand to offset the external headwinds that might impact the economy.
“The Philippines has actually diversified its sources of economic growth… We must also take note that sustained growth has been achieved through the manageable inflation environment,” he said.
The economy grew 6.8 percent in 2016, near the upper bound of the Duterte administration’s target range of 6 percent to 7 percent. This year, the government expects GDP to grow between 6.5 percent and 7.5 percent.
Members of the Makati Business Club also expressed a highly optimistic outlook for the economy, saying growth could either surpass or sustain the 6.8-percent expansion in 2016, despite expectations of increased inflation and interest rates.
Results of the MBC first semester executive outlook survey showed 83 percent of the senior business executives were expecting a higher or same level of GDP growth for 2017 compared to last year’s 6.8-percent growth rate, while 17 percent were projecting a lower economic growth rate.
The respondents”•76 out of 380 corporate members”•were mostly senior executives and top management representatives belonging to MBC.
The survey also showed that 85 percent of the respondents were expecting inflation rate in 2017 to be higher than last year’s average rate of 1.8 percent, while 12 percent of those who responded were expecting inflation to stay at the same rate. Only 3 percent were expecting it to be lower than in 2016.
More than half or about 57 percent of the respondents were expecting a higher 91-day treasury bill rate than last year’s rate of 1.5 percent, while 39 percent foresaw constant interest rates and 4 percent said it would move lower in 2017.
About 80 percent of the respondents were expecting the peso to further weaken against the US dollar by an average of 5.16 percent by end-2017, compared to 2016 year-end rate of P49.82 a dollar.
Meanwhile, 11 percent were expecting the peso-dollar rate to stay the same as end-2016, while the remaining 9 percent were expecting the local currency to appreciate against the dollar by 3 percent. With Othel V. Campos