March 20, 2018, 2:09 am
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1 Philippine Peso = 0.07076 UAE Dirham
1 Philippine Peso = 2.0501 Albanian Lek
1 Philippine Peso = 0.0343 Neth Antilles Guilder
1 Philippine Peso = 0.38842 Argentine Peso
1 Philippine Peso = 0.02496 Australian Dollar
1 Philippine Peso = 0.0343 Aruba Florin
1 Philippine Peso = 0.03854 Barbados Dollar
1 Philippine Peso = 1.59711 Bangladesh Taka
1 Philippine Peso = 0.03064 Bulgarian Lev
1 Philippine Peso = 0.00726 Bahraini Dinar
1 Philippine Peso = 33.73757 Burundi Franc
1 Philippine Peso = 0.01927 Bermuda Dollar
1 Philippine Peso = 0.02536 Brunei Dollar
1 Philippine Peso = 0.13218 Bolivian Boliviano
1 Philippine Peso = 0.0632 Brazilian Real
1 Philippine Peso = 0.01927 Bahamian Dollar
1 Philippine Peso = 1.24952 Bhutan Ngultrum
1 Philippine Peso = 0.18446 Botswana Pula
1 Philippine Peso = 385.7418 Belarus Ruble
1 Philippine Peso = 0.03849 Belize Dollar
1 Philippine Peso = 0.02523 Canadian Dollar
1 Philippine Peso = 0.01834 Swiss Franc
1 Philippine Peso = 11.71927 Chilean Peso
1 Philippine Peso = 0.12196 Chinese Yuan
1 Philippine Peso = 55 Colombian Peso
1 Philippine Peso = 10.83487 Costa Rica Colon
1 Philippine Peso = 0.01927 Cuban Peso
1 Philippine Peso = 1.72909 Cape Verde Escudo
1 Philippine Peso = 0.39802 Czech Koruna
1 Philippine Peso = 3.40713 Djibouti Franc
1 Philippine Peso = 0.11676 Danish Krone
1 Philippine Peso = 0.95896 Dominican Peso
1 Philippine Peso = 2.19576 Algerian Dinar
1 Philippine Peso = 0.2451 Estonian Kroon
1 Philippine Peso = 0.33786 Egyptian Pound
1 Philippine Peso = 0.52447 Ethiopian Birr
1 Philippine Peso = 0.01566 Euro
1 Philippine Peso = 0.03882 Fiji Dollar
1 Philippine Peso = 0.01381 Falkland Islands Pound
1 Philippine Peso = 0.01383 British Pound
1 Philippine Peso = 0.08486 Ghanaian Cedi
1 Philippine Peso = 0.90173 Gambian Dalasi
1 Philippine Peso = 173.4682 Guinea Franc
1 Philippine Peso = 0.14135 Guatemala Quetzal
1 Philippine Peso = 3.95511 Guyana Dollar
1 Philippine Peso = 0.15109 Hong Kong Dollar
1 Philippine Peso = 0.45397 Honduras Lempira
1 Philippine Peso = 0.11662 Croatian Kuna
1 Philippine Peso = 1.24432 Haiti Gourde
1 Philippine Peso = 4.86975 Hungarian Forint
1 Philippine Peso = 264.79768 Indonesian Rupiah
1 Philippine Peso = 0.06653 Israeli Shekel
1 Philippine Peso = 1.25202 Indian Rupee
1 Philippine Peso = 22.8131 Iraqi Dinar
1 Philippine Peso = 726.26201 Iran Rial
1 Philippine Peso = 1.91715 Iceland Krona
1 Philippine Peso = 2.44817 Jamaican Dollar
1 Philippine Peso = 0.01361 Jordanian Dinar
1 Philippine Peso = 2.04193 Japanese Yen
1 Philippine Peso = 1.94701 Kenyan Shilling
1 Philippine Peso = 1.31502 Kyrgyzstan Som
1 Philippine Peso = 76.72447 Cambodia Riel
1 Philippine Peso = 7.69364 Comoros Franc
1 Philippine Peso = 17.34104 North Korean Won
1 Philippine Peso = 20.59788 Korean Won
1 Philippine Peso = 0.00577 Kuwaiti Dinar
1 Philippine Peso = 0.0158 Cayman Islands Dollar
1 Philippine Peso = 6.21407 Kazakhstan Tenge
1 Philippine Peso = 159.5183 Lao Kip
1 Philippine Peso = 29.01156 Lebanese Pound
1 Philippine Peso = 3.00482 Sri Lanka Rupee
1 Philippine Peso = 2.52331 Liberian Dollar
1 Philippine Peso = 0.23064 Lesotho Loti
1 Philippine Peso = 0.05874 Lithuanian Lita
1 Philippine Peso = 0.01196 Latvian Lat
1 Philippine Peso = 0.02554 Libyan Dinar
1 Philippine Peso = 0.17689 Moroccan Dirham
1 Philippine Peso = 0.31757 Moldovan Leu
1 Philippine Peso = 0.96012 Macedonian Denar
1 Philippine Peso = 25.78035 Myanmar Kyat
1 Philippine Peso = 46.03083 Mongolian Tugrik
1 Philippine Peso = 0.15554 Macau Pataca
1 Philippine Peso = 6.76301 Mauritania Ougulya
1 Philippine Peso = 0.6368 Mauritius Rupee
1 Philippine Peso = 0.3 Maldives Rufiyaa
1 Philippine Peso = 13.74605 Malawi Kwacha
1 Philippine Peso = 0.35992 Mexican Peso
1 Philippine Peso = 0.07528 Malaysian Ringgit
1 Philippine Peso = 0.23044 Namibian Dollar
1 Philippine Peso = 6.87861 Nigerian Naira
1 Philippine Peso = 0.59692 Nicaragua Cordoba
1 Philippine Peso = 0.14861 Norwegian Krone
1 Philippine Peso = 2.00301 Nepalese Rupee
1 Philippine Peso = 0.02669 New Zealand Dollar
1 Philippine Peso = 0.00742 Omani Rial
1 Philippine Peso = 0.01927 Panama Balboa
1 Philippine Peso = 0.06293 Peruvian Nuevo Sol
1 Philippine Peso = 0.06089 Papua New Guinea Kina
1 Philippine Peso = 1 Philippine Peso
1 Philippine Peso = 2.12852 Pakistani Rupee
1 Philippine Peso = 0.06613 Polish Zloty
1 Philippine Peso = 106.35838 Paraguayan Guarani
1 Philippine Peso = 0.07013 Qatar Rial
1 Philippine Peso = 0.07303 Romanian New Leu
1 Philippine Peso = 1.108 Russian Rouble
1 Philippine Peso = 16.24143 Rwanda Franc
1 Philippine Peso = 0.07225 Saudi Arabian Riyal
1 Philippine Peso = 0.14897 Solomon Islands Dollar
1 Philippine Peso = 0.25942 Seychelles Rupee
1 Philippine Peso = 0.34781 Sudanese Pound
1 Philippine Peso = 0.15787 Swedish Krona
1 Philippine Peso = 0.02537 Singapore Dollar
1 Philippine Peso = 0.01381 St Helena Pound
1 Philippine Peso = 0.42786 Slovak Koruna
1 Philippine Peso = 147.01348 Sierra Leone Leone
1 Philippine Peso = 10.88632 Somali Shilling
1 Philippine Peso = 384.19653 Sao Tome Dobra
1 Philippine Peso = 0.16859 El Salvador Colon
1 Philippine Peso = 9.92254 Syrian Pound
1 Philippine Peso = 0.23065 Swaziland Lilageni
1 Philippine Peso = 0.60154 Thai Baht
1 Philippine Peso = 0.0462 Tunisian Dinar
1 Philippine Peso = 0.04308 Tongan paʻanga
1 Philippine Peso = 0.0755 Turkish Lira
1 Philippine Peso = 0.12954 Trinidad Tobago Dollar
1 Philippine Peso = 0.56091 Taiwan Dollar
1 Philippine Peso = 43.31406 Tanzanian Shilling
1 Philippine Peso = 0.50848 Ukraine Hryvnia
1 Philippine Peso = 70.36609 Ugandan Shilling
1 Philippine Peso = 0.01927 United States Dollar
1 Philippine Peso = 0.54624 Uruguayan New Peso
1 Philippine Peso = 156.45471 Uzbekistan Sum
1 Philippine Peso = 704.39304 Venezuelan Bolivar
1 Philippine Peso = 438.59343 Vietnam Dong
1 Philippine Peso = 2.01233 Vanuatu Vatu
1 Philippine Peso = 0.0486 Samoa Tala
1 Philippine Peso = 10.2763 CFA Franc (BEAC)
1 Philippine Peso = 0.05202 East Caribbean Dollar
1 Philippine Peso = 10.2763 CFA Franc (BCEAO)
1 Philippine Peso = 1.85954 Pacific Franc
1 Philippine Peso = 4.81503 Yemen Riyal
1 Philippine Peso = 0.23062 South African Rand
1 Philippine Peso = 99.99036 Zambian Kwacha
1 Philippine Peso = 6.97302 Zimbabwe dollar

In the pursuit of sustainable inclusive growth


Thank you for inviting me to speak at MAP’s General Membership Meeting and First Economic Briefing of 2017.

“Working Together to Achieve Inclusive Prosperity”

This is MAP’s guiding principle for 2017.  It is sensitive to recent developments where we witness moves by nations to leave economic unions; when countries speak of closing off their borders to neighbors and refugees; when societies are fighting back against public institutions.  All in the hope of raising their own standards of living.

The MAP therefore has to be commended for resolutely putting the themes of cooperation, social responsibility, and inclusion at the heart of its activities for this year. 

The MAP could not have chosen a more appropriate theme. 

I say this because the world has taken unexpected turns in the past couple of years, driven by a general sense of discontentment and a brewing distrust in public policies and institutions. How did we get to this point?

If you look closely at the trend of the Global Policy Uncertainty Index, two things jump out.

The first is that it has been nearly a decade since the global financial crisis broke out. And yet, we continue to live with high uncertainty and its aftermath of heightened volatility and uneven economic growth.

The second is that these are truly uncertain times. Rising inequality has given traction to anti-globalization and populist sentiment across the globe. Even as these protectionist tendencies have seen some resistance, public policy has become less certain on the whole. This tension has cast a heavy cloud over global economic prospects.

Indeed, the rise of protectionist pressures reflects a growing belief among countries that the benefits of growth need to be shared more equally and equitably. For public policymakers, this means that the goals of inclusivity and growth should always go hand in hand. 

This brings us to our theme and challenge today: How do we sustain our growth momentum while also creating a more inclusive society?

Let me structure the rest of my talk as follows:

I’ll continue with the world outlook, and the risks and challenges we see from these global impulses.

Then I’ll discuss our own domestic market dynamics, paying particular attention to the country’s sources of resilience that have allowed us to sustain positive growth and make notable headway towards greater inclusion.

Finally, I’ll relate these developments to emerging challenges for policy and the role the private sector can play in promoting inclusive growth.

In terms of the world economic outlook, global growth is projected to improve modestly over the next two years, with upward adjustments to the projections of the IMF for the US, EU, UK and Japan for 2017. Note, however, that these forecasts are still lower than the actual growth outcomes prior to the global financial crisis.

Meantime, the outlook for emerging markets is still mixed. In particular, economic activity in China has held firm, while growth projections for India and Brazil in 2017 were cut. A downside risk to this outlook, however, is potential political discord and heightened inward-oriented sentiment, both of which could undermine global trade and dampen financial market sentiment.

Meanwhile, an offshoot of the evolving upward momentum in global growth is the possibility of reflation, or that global inflation may be at a turning point. 

This positive momentum is reflected in the shift in policy stances of a number of central banks. As you all know, the US Fed raised its target Fed Funds rate by 25 bps last week. Furthermore, it is widely expected to continue on this path, with at least two more hikes anticipated in 2017. 

A review of recent monetary policy decisions suggests that central banks have largely turned neutral—they see less urgency for further accommodation and would rather stay on hold. This phenomenon has been described as “watchful pause”. 

The prospect of higher interest rates in advanced economies could cause capital outflows from emerging market economies (EMEs) as investors search for yield. The retreat of funds away from EMEs could lead to tighter dollar funding conditions in emerging markets. For firms with significant dollar-denominated liabilities, these developments could pose a risk to their balance sheets and profitability, unless of course these exposures have been adequately hedged.

In the case of the Philippines, we have seen some incipient signs of capital flow reversals as early as last year. Fortunately, the risk to businesses was mitigated by robust domestic liquidity and credit growth and by an adequate supply of foreign exchange. Debts of nonfinancial corporations in the Philippines also remain mostly peso-denominated, which provides some measure of insulation from external shocks.

Meanwhile, with the potential for capital outflows from EMEs, some emerging-market currencies could also see depreciation pressures and volatility in the near term. We have seen that kind of depreciation effect on the Philippine peso in recent periods. However, if we take a longer-term view on the movements of the peso, we can see that the peso has been broadly stable and competitive over the medium term. Looking ahead, we expect the peso to continue to draw strength from the steady stream of remittances from overseas Filipinos and of foreign exchange receipts from tourism and the BPO sector.

One other thing that we must be watchful of is the evolving dynamics of the international oil market. Oil prices rebounded right after the OPEC members agreed to cut output. However, the subsequent upswing in supply, due partly to renewed shale oil production in the US, has raised questions on the sustainability of the oil price rally. 

Keeping a close eye on all these developments is crucial because they have direct implications on business costs and consumer sentiment. On the latter point, we note from the BSP’s latest Consumer Expectations Survey that consumers hold a slightly less favorable outlook for the year ahead, owing to expectations of higher prices of goods, the depreciation of the peso, as well as concerns over poor harvests and an overall slowdown in business activity.

For policymakers, tracking these dynamics closely will therefore allow for a pre-emptive response, if needed, to protect the interests of businesses and consumers. On the part of central banks, they will need to ascertain the implications on future inflation, and particularly on inflation expectations, to see if adjustments in the monetary policy stance will be warranted.

In sum, ladies and gentlemen, we see three major trends in the global environment:

a modest but uneven recovery in global economic activity;

a tentative turning point for oil prices and inflation; and

heightened financial market volatility, owing to a hazy outlook on potential shifts in macroeconomic policies.

With these uncertainties in the external environment, we expect the year ahead to be just as challenging as the last one, if not more.The good news is that we can bank on solid macroeconomic fundamentals to keep the economy moving along on its path of robust growth. 

We have a broader base for growth, a manageable inflation environment, a sound banking system, and a healthy external payments profile. How can these buffers sustain the Philippine growth engine, and how sustainable is the Philippine growth story?

Over the last two decades, the country has weathered just as many financial crises—the Asian financial crisis in the late 90s, and the global financial crisis in the late 2000s. Throughout this period, the country managed to register 72 consecutive quarters of output expansion. To put things into perspective, we are referring to a span of 18 years.

Barring any significant shock, we are on track to extending this streak, as recent indicators of activity point to a strong growth impulse. The National Government expects growth to average 6.5-7.5 percent this year, higher than last year’s target of 6-7 percent. 

This mirrors buoyant business sentiment, as indicated in our latest Business Expectations Survey. The optimistic outlook is anchored on expectations of stronger job orders, the potential expansion of businesses and product lines, as well as the ongoing infrastructure projects of the government.

One reason for this sustained growth impulse is that growth has become more broad-based.

On the demand side, growth has historically been anchored by robust household consumption. In recent years, investments have also become a significant growth driver. In 2016, for instance, the contribution of capital investments to overall GDP growth even outstripped that of private consumption. Meanwhile, on the supply side, the shares of manufacturing and construction have also been increasing. This complements the steady contribution from services such as trade, real estate, and financial intermediation.

In short, the country now has more diversified domestic sources of growth. They should also serve as ample cushions against external shocks, particularly if protectionist sentiment continues to gain traction overseas and dampen the country’s export-oriented sectors.

It also bears noting that this sustained growth in output was achieved under a stable inflation environment.Going forward, we see average inflation will be within the target range of 2-4 percent for 2017-2018. A closer scrutiny of the monthly inflation path will show that inflation imprints will be rising until sometime in Q3 2017, when the monthly rates are expected to be very close to the upper band of the target range.  Even so, our forecast path suggests that monthly inflation will slow down thereafter, resulting in within-target full-year averages over the policy horizon or the next two years.

In addition, money supply remains ample. Even at double-digit growth rates, we do not see overheating in credit conditions, as credit continues to be channelled to key production sectors.More importantly, the intermediation of these funds is expected to remain safe and efficient, owing to our sound and stable banking system. Key indicators continue to reflect solid asset growth and  improving quality of loans. Capitalization also remains strong and above prescribed domestic and international standards. 

On the external front, the country’s current account has been in surplus for14 consecutive years, due to the sustained increase in overseas Filipinos (OFs) remittances, as well as business process outsourcing (BPO) revenues and tourism receipts. We saw a narrowing of the current account surplus in recent months. This trend may continue, as imports of capital goods are seen to further pick up. Such importation, we note, is necessary to support the expansion of the economy in the medium term.

Steady foreign exchange (FX) inflows from OF remittances and BPOs, however, will continue to allow us to maintain adequate FX reserves. We expect our gross international reserves to continue to be more than sufficient to meet the country’s FX liquidity requirements.

To reiterate, our macroeconomic fundamentals remain strong. On the one hand, these give us enough buffers to ward off the challenges posed by a difficult external environment.On the other hand, how secure are we against homegrown challenges? 

Political noise here as well as overseas is a manifestation that the benefits of growth may not have trickled down fairly to all sectors of society. The rise in populist sentiment globally suggests that inequality in society also poses a threat to prosperity. 

In essence, what we’re saying is that it is not enough for growth to be just fast and sustained. For growth to be truly meaningful, It must also be inclusive.

We can take heart in knowing that the Philippines has made noteworthy progress and intends to see more headway moving forward. 

For one, labor and employment conditions have shown marked improvements. The unemployment rate has declined steadily from 7.4 percent in 2010 to 5.5 percent in 2016. The government aims to reduce it further to between 3 and 5 percent by 2022 through its various social programs and sustained economic growth.

Poverty incidence and income inequality among Filipinos have also been on an appreciable downtrend, with the incidence of poor population declining from 49.5 percent in 1988 to 21.6 percent in 2015. The new Philippine Development Plan aims for this to fall further to 14.0 percent by 2022. 

Also, income inequality has been reduced. The Gini coefficient inched down from 0.49 in 1997 to 0.44 in 2015.

Finally, inflation for the lowest 30 percent of households is also lower now than in prior years. From 5.1 percent in 2009, it has fallen to only 1.4 percent as of end-2016, suggesting that these households are now less vulnerable to price shocks.

All these support the belief that with the right policies and programs in place,it is possible to achieve sustainable and inclusive growth. But for the engine of inclusive growth to keep running, both the public and private sectors must share in the responsibility of making sure that no Filipino is left behind. There is much to be done towards this end, so I reiterate the question I posed at the beginning: How do we create a more inclusive society?

In this regard, let me provide some highlights of the initiatives for public policy.

On the part of the BSP, we reaffirm our commitment to maintain price and financial stability conducive to balanced and sustainable growth. Our latest projections indicate that inflation is likely to settle within the target range of 2-4 percent for 2017-2018—at the moment, our forecasts are at 3.4 percent for 2017, and 3.0 percent for 2018. Inflation expectations also remain well-anchored. Therefore, the current stance of policy is deemed appropriate. 

The balance of risks surrounding our inflation outlook is, however, tilted toward the upside. The transitory impact of the proposed tax reform program as well as possible adjustments in transportation fares and electricity rates could raise the inflation trajectory. However, uncertainty over the prospects of the global economy and potential macroeconomic policy shifts overseas continue to pose a key downside risk.

Turning to financial stability, the BSP will remain steadfast in working to strengthen the banking system, improve risk management standards, and align our financial regulations with international best practices. 

Amid turbulence in the global economy, maintaining a market-determined exchange rate will help ensure the stability of the Philippine financial system and the economy as a whole. We are an inflation targeter, and therefore do not target specific exchange rates. That is why the BSP participates in the FX market only to limit volatility, or when movements are becoming misaligned with fundamentals.

Other measures include deploying liquidity provision measures to address any potential tightness in funding conditions; and enhancing macroprudential measures and other surveillance tools in targeting risks arising from capital flows and other vulnerabilities.

Let me also take a moment to highlight the BSP’s ongoing campaign for greater financial inclusion, an advocacy that I hold close to my heart. As outlined in the National Strategy for Financial Inclusion (NSFI), our work will revolve around three major areas: enhancing access to financial services, promoting financial education, and upholding financial consumer protection.

On enhancing access:  Only about 64 percent of cities and municipalities nationwide have banking presence. By allowing micro-banking offices (or MBOs) and alternative financial service providers such as pawnshops to enter underserved markets,88 percent of municipalities and citieswould have access to financial services. We have also put in place regulations that leverage on financial technology (“fintech”) such as e-money transactions, as well as programs aimed at improving access to financing for our small entrepreneurs.

On promoting financial education: We will continue with our Economic and Financial Learning Programs targeting OF families, the youth, and entrepreneurs. To date, we have conducted EFLPs in 79 of the 81 provinces in the country.

On financial consumer protection: We enacted BSP Circular No. 857 to ensure that BSP-supervised financial institutions (BSFIs) adhere to the highest service standards. We will continue to promote regulations that will encourage BSFIs to embrace a culture of fair and responsible dealings with the public.

Finally, we recognize that to enable the country to springboard toward a higher and sustainable growth path, it needs more infrastructure to increase the economy’s productive capacity and to redistribute the benefits of faster growth. Road networks, air and sea transport systems, facilities for health and other social services—all these should help address the congestion in Metro Manila and other urban areas, and in the process help distribute opportunities for employment and access to other public services to the rest of the regions. There is fiscal space to do all these, and the National Government has committed to capitalize on that space and ramp up infrastructure spending. 

Ladies and gentlemen, I hope that in the last half hour or so, I have been able to paint a fair picture of the outlook for the Philippine economy. All told, domestic sources of resilience will allow us to weather a difficult global environment and sustain growth amid a manageable inflation environment.

We owe this resilience largely to our continued investment in reform. The Philippines has made significant strides in strengthening its institutions and enhancing its competitiveness over the past years, and our efforts have not gone unnoticed. 

Beyond the recognition, these reforms have also begun to yield dividends for more Filipinos by encouraging private-sector participation and investments; ensuring fiscal sustainability; and promoting innovation and competition—all of which, in turn, have helped reduce poverty and income inequality. But this is not to say that the job is done. Far from it. What it means is that we have a big job ahead of us.

However, as recent global events have shown us, there is no guarantee that these benefits of growth will be shared fairly. 

The challenge, therefore, remains. Promoting sustainable and inclusive growth will require much work and the concerted efforts of both the public and the private sector.

As a final remark,let me say that the private sector remainsa vital cog in the country’s growth engine through investments, financing, andknowledge transfer. Your role in pursuing sustainable and inclusive growth isto provide opportunities for employment, and access to finance and expertise,especially to the sectors and regions where they are most needed.

The MAP, in particular, is moving in the right direction. You have yourTop Five Priority Programs for 2017: Traffic Management, Ease of DoingBusiness, Entrepreneurship, Employment Generation, and Women Empowerment. Allthese initiatives should provide a solid springboard towards your goal ofpromoting inclusive prosperity.

As we push forward in 2017, I hope that the MAP and BSP can work more closely together in this shared responsibility of pursuing sustainable and inclusive growth. Let me also wish the MAP continued success in its endeavors in the year ahead.
Average: 4 (1 vote)

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