The Bangko Sentral ng Pilipinas has underscored the need for the Philippines to rely more on consumption of Filipino households and enterprises for growth.
BSP Governor Amando Tetangco Jr. said in a statement Wednesday that for the country to achieve its growth targets, measures boosting domestic demand should be implemented.
“What we need to work on double time is strengthening domestic demand to make up for potentially slower trade, given the more negative growth outlook in the United States and Europe,” Tetangco said in a text message to reporters.
Tetangco’s statement came following the release of a report showing that Philippine exports fell by 10 percent to $4.09 billion in June from a year ago.
The decline in exports in June reduced the average exports growth for the first half of the year to only 4 percent. Exports in January to June reached $24.72 billion compared with $23.74 billion in the same period last year.
Tetangco said an environment supportive of growth in domestic demand would help shield the Philippines from the uncertainties in the external front.
Monetary officials have said low interest rates in the country could help sustain demand for bank loans and consequently boost consumption of individuals and investments by enterprises.
Economic managers likewise said programs that encourage investments, such as the Public Private Partnership (PPP), would help spur domestic investments.
Under the PPP, the government encourages private enterprises to invest in public infrastructure.
Meantime, the US Federal Reserve said that it was poised to maintain the record-low, near-zero policy rate in the United States until mid-2013 to help stimulate the US economy.
The US Fed acknowledged that the recovery of the United States from the latest turmoil, which peaked in 2009, is slower than expected.
The problems of the US economy was compounded by the move last Saturday of ratings firms Standard & Poor’s to downgrade the credit rating of the United States from AAA to AA+.
S&P cited the debt woes and economic situation of the United States for the rating action. It was the first time that the world’s biggest economy was slapped a credit rating downgrade.