There is enough money circulating in the economy to encourage growth, the central bank said, reiterating its stand that policy settings remain appropriate for the time being.
This announcement came on the heels of Thursday’s report that the Philippine economy’s growth in the first quarter of 2015 slowed to its lowest mark in years.
Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said there was hope for a recovery in the months ahead.
Also, the central bank believes there is no reason to cut key interest rates to further spur demand.
“The BSP continues to see monetary policy as appropriate given the continued growth of the economy and the good prospects for the rest of the year,” Tetangco said in a statement. “There is sufficient liquidity in the economy while domestic credit remains supportive of growth.”
On Thursday, the government said gross domestic product (GDP) expanded by 5.2 percent, falling short of state and private sector projections. This came amid tepid government spending during the first three months of the year.
For all of 2015, the government expects growth to range from 7 to 8 percent.
“Ahead of the data release, much attention had focused on reports of government underspending in the first quarter, echoing the disbursement problems that held back growth last year,” according to Capital Economics, a think tank.
Reacting to growth data, Capital Economics reported that the domestic economy remained in “good shape,” despite the first quarter slowdown. The dim performance of the exports sector, which contributed to the weak expansion, was due to a temporary cooling of international demand for Philippine-made goods.
“The weak performance in first quarter could spark some speculation that the central bank would cut rates. This seems unlikely to us,” the firm said.
On his part, Tetangco said growth numbers should improve in the coming months as spending issues are addressed, while investments and remittances, which fuel consumer spending, rise.
Last week, the BSP projected a 5-percent growth in remittances from migrant workers, which accounted for about a tenth of domestic output. The country is also expected to remain a net recipient of both direct and portfolio foreign investments, which tend to boost job creation.