Protracted rift to jolt economy, says BSP exec

The Bangko Sentral ng Pilipinas (BSP) gave a five to six percent growth forecast this year but warned that the local economy may be affected by a prolonged political conflict in the country involving the branches of government, highlighted by efforts to oust Chief Justice Renato Corona.

Speaking during the Communication and News Exchange (CNex) forum yesterday, BSP deputy gov. Diwa Gunigundo said the current political squabbles between Malacaang and its perceived enemies may have adverse effects on the economy if they continue for long.

President Aquino is currently waging war against the Supreme Court and former government officials led by former President and now Pampanga Rep. Gloria Macapagal Arroyo as part of what he calls his administations anti-corruption drive in government.

Yes, the political conflicts in the country may have some effects in the economy if they become protracted, Gunigundo said. This is why in my personal opinion, the issues should be resolved right away, he added.

In the absence of prolonged political problems, Gunigundo expects improvement in the economy this year owing to emerging signs of recovery of the United States and Europe from the global economic slowdown.

Such signs, Gunigundo said, include the growing retail sales and manufacturing in the United States and the planned establishment of a finance department in Europe.

But in case the situation in the United States and Europe continues to deteriorate, Gunigundo said the Philippines may find opportunities in intra-Asian trade. He said the country can find opportunities in its Asian neighbors that are performing better.

He said countries like Malaysia, Singapore, China and other Asian countries that have big and young populations and liberal capital account just like what Philippines possesses can provide the country the needed push through cross investments and healthy competition.

Last year, the country posted a moderate 3.6 percent growth for the first three quarters. The BSP attributed the modest gain to governments weak spending. With the governments promise to spend massively this year, Gunigundo said the economy will perform even better in 2012.

Earlier, BSP Gov. Amanda Tetangco expressed confidence that the country can withstand the impact of a sustained global economic crunch if the government would maximize the benefits it can get from the buffers it established such as the countrys sound macroeconomic fundamentals and policy space.

The BSP chief said the planned massive spending of the government will be the main driver of growth in the country. –Mario F. Fetalino Jr., Manila Times