By Bianca Cuaresma
The Bangko Sentral ng Pilipinas (BSP) ruled out on Thursday an easing of its monetary-policy stance, no matter the below-consensus output growth numbers in the first quarter, saying that there is enough liquidity in the financial system to support the continued expansion of the $272-billion economy.
“Economic growth in the first quarter of 2015 was modest. The BSP continues to see monetary policy as appropriate, given the continued growth in the economy and the good prospects for the rest of the year,” BSP Governor Amando M. Tetangco Jr. said in a text message.
“There is sufficient liquidity in the economy, while domestic credit remains supportive of growth. The BSP will continue to promote an enabling environment of stable prices and strong banking system,” he quickly added.
In recent months, several central banks in the region and around the world surprised markets by reducing interest rates to boost growth in their respective jurisdictions.
The series of monetary easing across more than 20 economies worldwide helped feed the notion the BSP will follow suit and reduce the rate at which it borrows from or lends to the various lenders.
But BSP officials and private economists have maintained the country’s economic expansion remained strong and does not need additional stimulus from the BSP.
The 5.2-percent performance in the first quarter was the weakest since the fourth quarter of 2011, and blamed on the government’s feeble spending and weak exports. But Tetangco said the economy should bounce back in the succeeding months: “There are developments on the ground, however, that should boost economic performance going forward.”
He particularly said that on the production side, government initiatives to mitigate the El Niño weather disturbance could push agricultural output past its first-quarter performance of just 1.6 percent.
“The higher inflows of foreign direct investment associated with the liberalized entry of foreign banks and their indigenous corporate investors should boost industry, particularly manufacturing and construction,” Tetangco said.
He also said sustained growth in remittances should remain supportive of domestic consumption on the demand side.
The BSP governor also remained optimistic that public spending will pick up in the next three quarters, translating to higher economic growth down the line.
“The BSP will continue to promote an enabling environment of stable prices and strong banking system,” Tetangco said.