BSP: No overheating of economy

The 6.5-percent gross domestic product growth in the second quarter showed that the economy was far from overheating, a top Bangko Sentral ng Pilipinas official said.

“Although the second-quarter real GDP growth stood at the lower end of the growth target for the 2017, it clearly promises to be very sustainable,” BSP Deputy Governor Diwa C. Guinigundo told reporters, citing robust expansion across the agriculture, industry and services sectors.

The second-quarter figure brought the first-half average to 6.5 percent, such that the state planning agency National Economic and Development Authority expects full-year growth to hit the lower half of the government’s 6.5-7.5 percent target range for the year.

“The 6.5 percent growth in the context of price stability is consistent with our potential output and that should convince us that overheating is quite distant at this point,” Guinigundo said, even as “the BSP’s ears remain firmly on the ground so we can act preemptively.”

For Guinigundo, the continuing growth story gives the BSP greater flexibility to take advantage of “our existing monetary space.”
He noted that strong imports growth slashed the current account to a deficit and, in turn, weakened the peso, but “what is important is that this sustained growth path should allow us to take a longer view of economic and financial developments.”

“Net exports have recovered such that real gross national income is now higher than real GDP. This should also validate our observation that higher economic growth required higher imports, allowed outward investments by residents and prepayments of external obligations that would in time translate into higher productivity, higher exports and still higher investments,” Guinigundo said. —BEN O. DE VERA