BSP makes case for sustained economic recovery

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno highlighted the country’s manageable inflation, stable banking system, and robust external position at the sidelines of the International Monetary Fund-World Bank Spring Meetings in Washington, D.C.

In separate discussions with institutional investors in conferences organized by Barclays, Bank of America Securities, and J.P. Morgan, Governor Diokno said that while inflation will average 4.3 percent this year, exceeding the government’s target range of 2.0 to 4.0 percent, it is expected to ease to 3.6 percent next year. Philippine inflation settled at 3.4 percent in the first quarter of this year driven by elevated energy costs.

The Governor also emphasized that the Philippine banking system remained sound and stable throughout the pandemic, with credit and capital conditions supportive of growth and well above regulatory requirements.

The country’s external position remains strong with gross international reserves of US$108.5 billion as of end-March 2022. This is equivalent to 9.6 months’ worth of imports of goods and payments of services, and manageable external debt which stood at 27 percent of GDP in 2021.

The country’s usual sources of foreign exchange also continued to rise in 2021 – overseas Filipino remittances increased by 5.1 percent; business process outsourcing receipts grew by 9.5 percent; and net foreign direct investments jumped by 54.2 percent.

In support of the Philippines’ post-pandemic recovery, the BSP has carried out a wide range of monetary and regulatory measures, which include enhancing market confidence and ensuring adequate liquidity and credit, complementing government programs through extraordinary liquidity measures, and implementing regulatory and operational relief measures.

“All these have contributed to helping the Philippine economy get back on track in 2022,” the Governor said.