Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. expressed confidence yesterday that the monetary policies of the BSP would allow the economy to be “relatively less affected” by the global slowdown.
Tetangco said yesterday that the policy reforms already undertaken by the BSP have put the Philippine economy in a better position to weather a further negative impact of the slowdown.
“The discipline of the inflation-targetting framework that we adopted in 2002 has helped the BSP focus more on its primary mandate of price stability,” Tetangco said. “I believe we have been fairly successful at keeping inflation at manageable levels and this has engendered a stable macro-economic environment for business and investment planning.”
Despite the generalized gloom, Tetangco said there are still “bright spots” in the economy that the country could take advantage of, especially the business process outsourcing (BPO) sector.
“As companies become more conscious of cost, I believe our BPO centers would maintain their competitiveness,” Tetangco said.
The BPO industry has been gradually emerging as one of the country’s significant foreign exchange generators and was seen as a reasonable alternative to sending workers abroad which generate foreign exchange but at the cost of social disruption.
Tetangco added that the country should also benefit from the mining sector since the non-oil commodity sectors, globally, would remain supported. “With the Mining Act in place, we are poised to take advantage of that opportunity also,” he said.
In the end, Tetangco said remittances from overseas Filipino workers (OFWs) are still the country’s strongest growth driver, especially if exports slowed down because of lower global demand for goods, in general.
“The demand for our higher skilled workers is expected to be generally unaffected by recession, especially in the medical and health care fields,” Tetangco said. “Finally, as in the previous crises we faced, I believe domestic demand will be a key driver for the resilience of growth this time,” he added.
Because of an appropriately prudent banking regulatory structure, Tetangco said the country’s domestic banks are now well capitalized and have the healthiest balance sheets in at least 10 years.
“These have provided banks room to absorb further shocks from the current global financial stress,” he said.
Tetangco also said that the gradual opening up of the system to financial innovation has also resulted in banks that are less exposed to structured products of the troubled global financial institutions.
“Furthermore, because we have relatively stronger external position, it has allowed us to be less dependent on the international capital markets for our financing requirements,” he said. “This has provided some cushion against volatilities in the exchange rate that have resulted from risk aversion towards emerging economies.” –Des Ferriols, Philippine Star
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