BSP says high growth sustainable

The Bangko Sentral ng Pilipinas (BSP) said the country’s growth in the third quarter showed the effectiveness of current monetary policy settings in spurring economic activity. AP FILE PHOTO

The Bangko Sentral ng Pilipinas (BSP) said the country’s growth in the third quarter showed the effectiveness of current monetary policy settings in spurring economic activity.

BSP Governor Amando M. Tetangco Jr. added that the economic data released Thursday by the National Statistics Coordinating Board (NSCB) proved the country’s recent boom was a result of strong fundamentals.

“The gross domestic product (GDP) performance in the third quarter attests to the underlying constructive dynamics of the economy,” Tetangco said in a statement.

“These developments affirm the appropriateness of current monetary policy settings in supporting sustainable growth in economic activity, consistent with the goal of safeguarding price stability,” Tetangco said.

The BSP’s benchmark overnight borrowing and lending rates currently stand at record lows of 3.5 and 5.5 percent, respectively. Yields for the central bank’s special deposit accounts (SDAs) are also at 2 percent across all maturities.

Amid the low interest-rate environment, loans of universal and commercial banks net of placements with the BSP grew by 15.8 percent at the end of September over year-ago levels. Despite the high growth in lending, consumer prices remained stable, increasing by just 2.9 percent in October.

This was below the BSP’s target range for the year of 3 to 5 percent.

Meanwhile, Singapore’s DBS Ltd, Southeast Asia’s largest bank, said improving economic conditions overseas and strong domestic demand would help keep the Philippines on track to hitting healthy economic growth rates in the coming years.

In a commentary on Thursday, DBS said a slowdown in growth due to Typhoon Yolanda should be expected in the fourth quarter of the year. However, this would likely be short-lived, given the Philippines’ sound macroeconomic fundamentals.

“A stronger recovery in the global economy coupled with persistently robust domestic demand is likely to continue anchoring GDP growth momentum in the medium term,” DBS said.

“The big question is on the outlook going forward, following Typhoon Yolanda,” DBS said. The bank currently sees the Philippine economy growing by 7 percent this year, matching the top end of the government’s official target.