Domestic demand to propel PH growth in 2012, says BSP

The Philippine economy is expected to grow again in 2012 despite global financial uncertainties, as domestic demand is seen to remain robust.

This is according to the Bangko Sentral ng Pilipinas, which said that domestic consumption and investment demand will likely remain strong in 2012, thus offsetting the ill effects of an anemic global environment.

“Our assessment is that the country’s structural economic makeup is self-sustaining,” BSP Governor Amando Tetangco Jr. said Wednesday in a briefing organized by the Foreign Correspondents Association of the Philippines (Focap).

“Against a backdrop of sound macroeconomic fundamentals, we believe domestic demand will remain a major contributor to growth,” Tetangco added.

The consensus among economists is that the debt crisis in the eurozone will likely persist in 2012.

Consequently, export earnings by exporting countries like the Philippines are seen to remain lackluster.

Tetangco said, however, that favorable domestic factors should help cushion the impact of unfavorable external developments.

The government said these include relatively low interest rates, benign inflation, improving fiscal situation and a stable financial sector.

To help ensure growth, Tetangco said key policy rates may have to be cut early next year.

Low interest rates help spur demand for loans, which in turn support consumption and investments.

Tetangco added that government spending should be accelerated next year as planned as government spending is one of the best domestic sources of growth.