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THE year
ahead could prove challenging but the state of the
economy is such that the Bangko Sentral ng Pilipinas
could manage them effectively, BSP governor Amando M.
Tetangco Jr. said on Thursday.
In a
speech before the Rotary Club of Manila, Tetangco said
elevated oil prices, the US subprime mortgage crisis and
the global risk aversion this spawned require elevated
vigilance on the part of regulators like the BSP as
well.
He
considers the challenges “manageable” and expressed
confidence Manila “would be able to ride out the
headwinds that threaten to confront us.”
Despite
the cited threats, Asia (excluding India and China) as a
whole was still seen to grow by 5.9 percent in 2007 from
5.7 percent in 2006.
The
Philippines is expecting growth of around 7 percent
which is the highest in 30 years, the US subprime woes
notwithstanding, according to Tetangco.
This
shows the crisis was more financial than macroeconomic,
he added.
He
acknowledged Asia has become less dependent on the US
for trade but is still not immune to a
US
slowdown.
“The
success of the
US
and other major economies in avoiding a prolonged
economic slowdown, therefore, becomes of particular
importance to Asia,” according to Tetangco.
The
speed and manner at which this was accomplished by
central bankers like themselves would determine how
asset and equity prices behave and whether or not
capital flows and exchange-rate movements would adjust
in orderly fashion.
“In the
Philippines the BSP has built up reserves, prepaid its
external debt and liberalized the foreign-exchange
system to contain the impact on the peso of the strong
forex inflows,” Tetangco said.
He
expected inflation this year to be higher than last year
due to higher oil prices.
But
while the challenges are formidable and beyond their
control, Tetangco said the Philippines will ride out the
storm because its macroeconomic underpinnings have never
been this strong in recent years.
“[This
makes us] more resilient in the face of global
challenges,” he said.
He added
the
Philippines was
on the upward phase of the business cycle and barring
unforeseen risks, economic expansion was seen to
continue.
“This
will be driven by the combined acceleration of the
industry and services sectors on the production side and
consumption and investments, both private and
government, on the expenditure side,” Tetangco said. |
