The Bangko Sentralng Pilipinas, much like Malaya, will be celebrating a hallmark anniversary thisyear – its 25th year – from its inception on 3 July 1993. A lot can happenin a score and 5 years’ time, one event is the United States (US) financialcrisis which stemmed from its sub-prime mortgage crisis in 2007 which thenunfolded to a global economic slowdown.
Amid thesechallenges, the BSP has remained steadfast in its commitment of price and financialstability and the operation of an efficient and reliable payments systemconsistent with sustaining the Philippines’ solid macroeconomic track recordwhile keeping ample policy space to help achieve growth objectives of the country. Looking Back: The Economic and Financial Landscape in2017 In 2017, globaleconomic growth gained traction brought on by notable rebounds in trade, investment,and industrial production, and further supported by improved business andconsumer confidence. The uptick in economic growth prompted major centralbanks, especially in advanced economies, to gradually shift from accommodative tomore neutral monetary policy stance. For instance, buoyed by strong labormarket conditions and increased domestic spending, the US Federal Reserve raisedits target federal funds rate by 25 basis points to 1.
5 percent last December2017. However, therecovery in advanced economies also brought in front the prospect of higherinterest rates overseas which resulted in capital outflows from emergingmarkets as investors searched for yields. In particular, the Philippinesregistered net outflows in portfolio investments as well as depreciation of thepeso and deficit in the balance of payments account. All the same, thePhilippine economy continues to be underpinned by strong fundamentals.
ThePhilippine economy has experienced sustained and uninterrupted expansion forthe past 75 quarters, with the first three quarters of 2017 registering growthof 6.7 percent, within the government’s growth target of 6.5 – 7.
5 percent forthe year. This expansion is backed by robust production, domestic demand, andpositive exports growth. Moreover, inflation remained low and stable for 2017.Headline inflation slightly rose to 3.2 percent due largely to risinginternational crude oil prices but remained well-within the official target rangeof 2.0 – 4.0 percent.
The latest forecast show that inflation is expected tosettle near the mid-point of the target range in 2018. At present, the BSPdeems its policy stance of low interest rates appropriate. At the same time,the Philippines’ stable and robust financial system continues to supporteconomic growth.