BSP says China stimulus program positive for Philippines

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) believes the decision of the People’s Bank of China to adopt additional stimulus to help ease its economic slump is positive for countries in Asia including the Philippines.

BSP Governor Amando Tetangco Jr. said China plays a major role in Asia and any measures adopted by its central bank to check its slumping economy would be good.

“To the extent the stimulus measures will ensure that a significant Chinese economic slowdown is forestalled, we see these as positive for the region, given the key role China plays in regional trade,” he said in a text message.

He pointed out investors would adopt a wait and see attitude pending the release of the details of the stimulus program as well as for measures pertaining to the Chinese yuan.

“Markets however will likely wait for more specifics, particularly on the liquidity operations of the PBOC and if there would be further moves to depreciate the renminbi,” Tetangco added.

The PBOC added cash to China’s financial system after it auctioned 30 billion yuan ($4.7 billion) worth of seven-day reverse-repurchase contracts in its open-market operations at a yield of 2.25 percent last Tuesday.

It also devalued its currency anew by setting the reference rate at 6.4746 versus 6.4808 last Monday.

“Trading is relatively thin ahead of the holidays, so it may take some time for markets to digest the full implication of the new measures,” Tetangco said.

China’s leaders signaled they would take further steps to support growth, including widening the fiscal deficit and stimulating the housing market, to put a floor under the economy’s slowdown.

The government’s annual growth target is typically set at the gathering, though not announced. President Xi Jinping previously suggested the nation must meet a minimum annual average growth pace of 6.5 percent through 2020.

China’s economy grew 6.9 percent in the third quarter, its slowest in more than six years.

The growth target this year is for a rate of about seven percent, its weakest expansion since 1990.