BANGKO Sentral ng Pilipinas (BSP) Governor Benjamin Diokno insisted that while the economy continues to be under pressure due to the effects of the global pandemic, its fundamentals remain solid enough to withstand the shocks.
The BSP chief said in a recent speaking engagement that manageable inflation, stable banking sector, and robust external payments position, among other fundamentals, will support recovery and help keep the economic effects of the pandemic temporary.
“The Philippines’s economic fundamentals remain sound. While the pandemic poses challenges in the short term, the country continues to enjoy bright medium- and long-term growth prospects,” Diokno said.
In terms of inflation, the governor said that while estimates point to a missed target this year, they are confident that prices will ease back toward the midpoint of the target band next year and in 2023.
“Manageable inflation will continue to provide an enabling environment for investments and, therefore, job creation and income growth,” Diokno said.
In terms of banking sector stability, banks in the country have kept their capitalization and liquidity buffers well above the regulatory requirements and their exposure to bad debts manageable throughout the crisis.
“As such, banks will remain capable of supporting growth of the economy,” Diokno said.
And on the country’s external accounts, the governor said the current buffers are sufficient to manage impact of shocks, including market reaction over pending move of the US Federal Reserve to normalize its monetary policy.
“Our external liquidity buffers continue to be more than adequate. Our hefty GIR[gross international reserves], steady inflows from remittances and BPOs [business process outsourcing], and recovery of exports and FDI [foreign direct investments] will support the peso,” the governor said.
Diokno also said that local economic managers are “bent not only to regain over the short term what was lost from the crisis” but also in “building a new Philippine economy that is safer, stronger, more technologically advanced, and more inclusive.”
For its part, Diokno said BSP will keep its policy settings and regulatory relief measures supportive of the economy as needed.