MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) and global investment bank giant JP Morgan expect the Philippines to continue its economic momentum under president-elect Rodrigo Duterte.
BSP Deputy Governor Diwa Guinigundo said an annual 7%-8% GDP growth for the Philippines is “doable” despite the change in leadership set to be official on June 30.
“We would expect that the economy will continue to be stable and the macro economy will continue to attract confidence of the markets,” Guinigundo said.
The BSP’s Monetary Board kept interest rates unchanged for 13 straight policy setting meetings since October 2014 on Thursday, May 13, as inflation remained within the BSP’s target range of 2%-4%.
The central bank also kept its inflation forecast at 2.1% for this year and 3.1% in 2017.
The BSP target echoes that of the targets set by the Duterte camp. On Thursday, the latter said it is eyeing 7-8% economic growth as it aggressively pursues poverty alleviation.
“If we want to reduce the poverty rate, we need higher growth,” said Duterte spokesman Peter Laviña.
Former agriculture secretary and Duterte transition team member Carlos Dominguez III pointed out that the market’s positive reaction to the election bodes well for growth.
“We are very encouraged by the reaction of the stock market to the election of [incoming] President Duterte. In the last 3 days, the stock market has gone up in value by 5%,” he said, adding that the peso also strengthened against the dollar.
The president-elect’s team has moved quickly since the elections, most notably releasing at 8-point economic agenda which highlights Duterte’s intention to maintain the current macroeconomic policies and infrastructure spending while reforming tax.
Duterte has also signaled that he is willing to consider lifting constitutional restrictions on foreign ownership.
Absence of drastic shifts encouraging
These developments were viewed positively by banking giant JP Morgan. It said that both the financial and equities market welcomed the economic agenda of the incoming administration in its latest Asia Pacific Equity Research.
“We believe that financial markets will welcome the explicit commitment of the incoming administration in keeping the current macro-economic policies, particularly its focus on infrastructure,” the investment bank said.
“The absence of any drastic shifts is encouraging, in our view. The focus on grassroots development is also laudable, as inclusive growth has been a persistent problem of the economy. It also helps that the new government is cognizant of the need to maintain fiscal discipline despite its goal of making income tax more progressive,” JP Morgan added.
The bank cautioned, however, that “the appointment of a capable and experienced cabinet and economic team, and eventually, the ability to execute, are the next milestones to watch for.” – Rappler.com