BSP sees ‘early signs’ of economic recovery

THE Bangko Sentral ng Pilipinas (BSP) said it is seeing early signs of economic growth as the US, the Philippines’ major export market, showed slower contraction in the housing and manufacturing sectors.

BSP Governor Amando Tetangco Jr., told reporters the central bank would reverse its monetary policy tack in the medium term as economic condition showed signs of recovery.

“Many things, factors need to be considered. But yes, a medium term strategy would include a reversal of some of the easing that the BSP implemented. It is, however, difficult to say when this shall be put in place. We are seeing early, though perhaps tentative, signs of recovery in the market. For example in the US, contraction in the housing and manufacturing markets has slowed,” he said, when asked about the BSP’s strategy for unwinding previous policy measures.

“We also have yet to see how the other measures implemented by the major economies would filter into their respective economies and into risk appetite of investors, in general,” he added.

The BSP has so far trimmed its overnight rates by 150 basis points since December last year to spur economic activity amid the global slowdown.

It slashed its overnight borrowing and lending rates by 25 basis points last Thursday, bringing both to 4.5 percent and 6.5 percent, respectively.

The BSP had said it is poised to further cut its policy rates to support the economic activities.

Philippine economic expansion slowed to 4.6 percent last year from 7.3 percent in 2007, driven mainly by private consumption as weak export earnings pulled down the growth.

The Development and Budget Coordinating Committee (DBCC) recently cut the country’s growth target to between 3.1 percent and 4.1 percent for this year, from its previous forecast of 3.7 percent to 4.4 percent.

Bank deposits up by double digits

In a statement, the BSP said banks’ total deposits continued to grow by double-digits, rising 14.4 percent to P3.2 trillion in 2008 from P2.8 trillion in 2007.

Of the total, savings deposits, which accounted for almost half of the funding base, posted a decline of 5 percent year-on-year.

Time and demand deposits increased by 51.4 percent and 19.1 percent, respectively.

“The banking channel is able to mobilize a good chunk of available funds, even at a time of global difficulties,” BSP Deputy Governor Nestor Espenilla Jr. had said.  –Maricel E. Burgonio, Senior Reporter, Manila Times