The appointment of Nestor A. Espenilla Jr. as the next governor of the Bangko Sentral ng Pilipinas (BSP) should erase the remaining concerns, if any, that the Philippine economy’s impressive growth under the Duterte administration is nothing but a wild-goose chase that will go nowhere.
I consider the tandem of Finance Secretary Carlos “Sonny” Dominguez and Espenilla as a very solid one, and the best thing that has happened to our economy so far.
Kudos are in order to President Rodrigo Duterte, whose strategies in the economic field are now being popularly dubbed “Dutertenomics.”
With Espenilla on board, the President’s economic team led by Dominguez should continue to push for fast-paced and inclusive growth while maintaining stability in the business environment.
The team also includes Transportation Secretary Arturo Tugade, Budget and Management Secretary Benjamin Diokno, Public Works and Highways Secretary Mark Villar and Socioeconomic Planning Secretary Ernesto Pernia.
Right now, the economy is performing well, and the prospects are very bright. The stock market is booming, with the Philippine Stock Exchange index (PSEi) hitting new highs last week. Some analysts are already talking about the PSEi, the main barometer of stock prices, hitting 10,000 points in the next two years, from last week’s range hovering at the 7,200-point level.
Government policies are steady – not perfect, but steady – while inflation remains within the BSP’s target range of 2 to 4 percent. The BSP is also keeping its policy rates unchanged, which should continue to encourage investments.
The economy is expected to hit the government’s target despite the 6.4-percent GDP growth posted in the first quarter of 2017. The government is targeting a GDP growth of 6.5-7.5 percent for this year.
In its April economic update for the Philippines, the World Bank said GDP is expected to grow by 6.9 percent in 2017 and 2018.
With sound domestic macroeconomic fundamentals, the World Bank said the Philippines would remain one of East Asia’s top growth performers. According to the global lender, the government’s commitment to continue increasing infrastructure spending will sustain the growth momentum and reinforce business and consumer confidence.
In turn, strong and inclusive economic growth is projected to further increase household consumption and accelerate poverty reduction. The government aims to spend P860.7 billion this year, equivalent to 5.4% of GDP, on public infrastructure.
Meanwhile, net foreign direct investments (FDI) increased 7 percent in February this year to reach $366 million from $342 million in the same month last year. For the first two months of 2017, net FDI stood at $1.1 billion, up 11 percent from the same period in 2016.
The BSP plans to raise the FDI target of $7 billion for this year because the amount was already breached in 2016, when full-year FDI reached $7.93 billion. The BSP noted that the increasing investment inflows reflect investors’ confidence on the Philippine economy on the back of strong macroeconomic fundamentals.
Monthly cash remittances from overseas Filipinos, which is a main driver for consumption growth, grew 10.7 percent to reach $2.6 billion in March. This brought the total for the first three months of 2017 to $7 billion, up 7.7 percent from a year ago.
With the strong economic team and the President’s focus on increasing job generation, I believe we can expect a continuing improvement in our lives for the next five years of the Duterte administration.
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