The Philippine economy is expected to grow on the back of increased individual consumption and government spending, although risks from rising prices, rising interest rates and currency volatility could stunt this momentum, a group of government financial regulators said on Wednesday.
In a press statement, the Financial Stability Coordination Council (FSCC) said its latest systemic risk review highlighted the country’s strong economic performance on several fronts, as well as the challenges faced by local markets.
“The uptrend in market prices, global interest rates and benchmark currencies were primarily considered in light of the technical models which have been designed by the FSCC team,” the group said after its latest quarterly meeting, where it assessed potential risks to the continued stability of the Philippine financial market.
On the upside, however, the group said the economy continues to be “driven primarily by local sources of growth, specifically by increased consumption from individuals which is fueled by more disposable income and by government expenditures.”
The FSCC is composed of the Bangko Sentral ng Pilipinas (BSP), Department of Finance, Insurance Commission, Philippine Deposit Insurance Corporation and Securities and Exchange Commission, and is chaired by BSP Governor Nestor Espenilla Jr.
According to the group, current trends position the Philippines well in the Asean and global context where the latest forecasts from the IMF show continued growth over the next few years.
“Various risks that could potentially dampen further growth momentum were discussed by the FSCC,” it said. “Global issues flagged by third-party institutions as well as local challenges were reviewed as to their likelihood and impact. Mitigating these risks is the availability of additional market liquidity to support the government’s infrastructure development program.”
Since the notion of financial stability is forward-looking in perspective and pre-emptive in nature, the FSCC highlighted the necessity for continued vigilance in the surveillance of unfolding market developments and in systemic risk monitoring, the group said.
“The council likewise looked towards strengthening its communication initiatives across various stakeholders,” it added.