Philippine central bank calls for higher growth

THE Bangko Sentral ng Pilipinas (BSP) said economic growth would accelerate this year on the back of solid macroeconomic fundamentals.

BSP Governor Amando Tetangco Jr. said the country’s gross domestic product (GDP) could expand by 7 percent to 8 percent this year, or faster than the 35-year record growth of 7.3 percent in 2010.

Tetanco said 2009 was the year the Philippine economy showed resilience against the global financial crisis, and 2010 as the year of the fulfilled promise of economic rebound. “2011 could be characterized as the year of sustaining the growth momentum,” he said in remarks delivered during the induction of officers of the Economic Journalists Association of the Philippines late Friday.

Underpinning the BSP chief’s positive outlook is the general perception that the uneven growth trajectories of advanced and emerging economies will continue. He said advanced economies would experience fragile recovery amid pockets of vulnerability, while emerging economies would remain the main engine of global economic growth.

Tetangco cited the International Monetary Fund’s projection of an 8.5-percent GDP growth for emerging market economies in Asia this year or more than three times faster than the 2.5-percent growth projected for advanced economies.

He said the US has been struggling with a “jobless economic recovery path,” which made the Federal Reserve undertake another round of bond buying, or the so-called second round of quantitative easing, to support economic activity.

Besides the US, the Euro zone’s economic landscape likewise appear no better, with investors fearing a full-blown sovereign debt crisis would erupt in some member-countries.

Inflation last year averaged 3.8 percent, at the low end of the central bank’s target of 3.5 percent to 5.5 percent—providing the BSP enough room to maintain its key policy interest rates at record lows of 4 percent and 6 percent.