Philippines faces economic ‘headwinds’ in ’12, BSP warns
The global outlook for 2012 is weak.
Thus said the head of the Bangko Sentral ng Pilipinas who warned Thursday that the Philippine economy faces a “triple whammy” threat this year, from the confluence of unfolding and potential crises in the United States, Europe and China that may influence local business and consumer confidence.
At the same time, however, BSP Governor Amando M. Tetangco Jr. said that the combined effects of the troubles in the world’s largest economic blocs can be deflected if the government and the private sector ramp up spending and investment.
“We are cognizant of the risks our economy faces from the anemic US growth, the possibly prolonged resolution of the European debt crisis and the slowdown in China,” he said in his annual economic outlook speech Thursday before the Rotary Club of Manila.
“But unlike in the advanced economies, which need circuit breakers to stop the negative spiral, the Philippines appears to have a greater need for ‘series cables’ to jumpstart the economy, keep it moving, then allow for the growth rate to shift to higher gear and sustain the speed at a cruising rate,” Tetangco added.
While the Philippines is better positioned to withstand the effects of the global turmoil, the central bank chief said more can be achieved in terms of attaining quality economic growth.
“At some point in our economic history, we, as a people, should desire not simply to stay above the fray,” he said. “We should be yearning for quality improvement in our individual lives. We should be aspiring for higher ground for all.”
Last year, the bulk of the growth stimulus for the economy was provided by the monetary sector with regulators keeping borrowing rates at low levels, aided by stable prices of goods and services.
However, the benefits of the low interest rate regime were capped by the anemic spending policy of the Aquino administration, as it sought to ensure corruption-free government infrastructure contracts.
The private sector, meanwhile, was largely unable to help push growth higher amid prolonged delays in the administration’s flagship economic scheme, the Public Private Partnership (PPP) program.
For 2012, Tetangco pointed out that inflation rate will likely remain manageable and stay within the government’s forecast range, raising the likelihood of another round of monetary policy easing to help boost economic growth.
