Economy shielded from external risks – Diokno
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Wed, 24 Jul 2019 16:18:47 +0000
THE Philippine economy remains insulated from the impact of external headwinds that other economies continue to reel from, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno.
During The Manila Times 2019 Midyear Economic Review in Makati City on Tuesday, Diokno warned that escalating trade tensions among major economies continue to pose a downside risk to both growth and inflation.
“Uncertainty over trade policies dampen global demand and temper international commodity prices,” he said.
His warning came just before the International Monetary Fund (IMF) reduced its world economic projection to 3.2 percent this year and 3.5 percent in 2020, citing as reasons those same tensions — which it said were hurting investments and manufacturing — and continued uncertainty.
The trade war between the United States and China caused much of these tensions, which stemmed from US President Donald Trump accusing Beijing last year of engaging in unfair trade practices. This led the world’s two leading economies to impose tit-for-tat tariffs worth billions of dollars on each others’ goods, rattling markets.
Trade negotiations between Washington and Beijing to resolve this were held late last year, but stalled in May. Trump and his Chinese counterpart Xi Jinping agreed to resume these during the Group of 20 meeting in Osaka, Japan, in late June.
Fortunately, the central bank chief said, the country’s growth narrative over the past three decades has been anchored on the strength of strong household consumption and a resilient production base.
“We project a steady recovery in household spending as commodity prices continue to stabilize,” Diokno added.
Years of structural reform also continue to facilitate investments and generate employment, according to the Bangko Sentral governor.
“Together with a financeable external payments position and our sizeable international reserves, the economy should be well-cushioned against significant external shocks,” he said.
The Philippines’ external payments position, as measured by the balance of payments, posted a $4.788-billion surplus in the first half of 2019, erasing the $3.257-billion shortfall in the same period last year.
It was higher than the BSP’s upwardly revised forecast of a $3.7-billion surplus for this year.
“The surplus may be attributed partly to remittance inflows from overseas Filipinos during the first five months of the year and net inflows of foreign direct investments during the first four months of the year,” the Bangko Sentral explained.
Meanwhile, the country’s gross international reserves surged to a 33-month high of $85.379 billion in June on the back of higher gold prices, the government’s foreign-currency deposits, and the Bangko Sentral’s foreign-exchange operations and investment income.
It was enough to cover 7.4 months worth of imports, and also equivalent to 5.1 times the country’s short-term external obligations due within one year and 3.7 times based on residual maturity.
WITH A REPORT FROM AFP
The post Economy shielded from external risks – Diokno appeared first on The Manila Times Online.