Long-term growth of 6.5% sustainable — Diokno

MANILA, Philippines — The Philippines is capable of sustaining a long-term economic growth of 6.5 percent amid the long list of structural reforms that started way back in the 1990s, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said.

“The Philippines has come a long way from being the ‘sick man of Asia.’ In fact, the Philippines is now recognized globally as among the fastest growing and most resilient economies in the world that enjoys brighter prospects ahead,” he said.

He said the country remains on a solid footing despite the threat of slowing economic growth looming larger than ever on the horizon as protectionist policies and geopolitical tensions continue to dominate the global growth narrative.

Diokno said during the meet and greet session with the Philippine Embassy headed by Ambassador Jose Manuel Romualdez and the US-Philippines Society in Washington D.C. that the transformation did not happen overnight.

“I remember in the 1990s when a group of economists headed by Paul Krugman came to the Philippines to assess the economy. Their verdict then on the long-term growth of the Philippines was, at best, three percent. We’ve come a long way from that dismal assessment,” he said.

The BSP chief said the country’s economic growth is solid and sustainable.

“The Philippines recorded its 82nd consecutive quarter or roughly more than 20 years of uninterrupted economic growth in the second quarter of 2019. This shows that we have managed to sail through the toughest external challenges from the Asian financial crisis to the Global financial crisis,” Diokno said.

On the production side, Diokno said economic growth was propelled mainly by the robust performance of the services sector, while broad-based expansion in household consumption and government spending reinforced growth on the demand side.

He said the Build Build Build program ushers in the country’s “Golden Age of Infrastructure” giving additional solid push for the economy’s productive capacity to expand further.

“The country has been making considerable progress toward achieving its macroeconomic goals. Looking ahead, prospects for the domestic economy continue to remain favorable as domestic growth fundamentals are expected to remain intact. GDP expansion is expected to continue to pick up in 2019 due to the robust growth in the services and industry sectors,” Diokno said.

He said private demand is expected to remain firm, aided mainly by sustained remittance inflows and stable inflation.

“As more government infrastructure programs get underway, the positive spillover effects on private capital formation would also contribute to economic growth,” he said.

According to Diokno, the country’s inflation also remains low and manageable easing to a 41-month low of 0.9 percent in September from a nine-year peak of 6.7 percent in September and October last year after a series of monetary policy actions by the BSP that addressed second round effects combined with and non-monetary actions such as the Rice Tariffication law that addressed bottlenecks to food supply.