The Philippine Economy Towards Resilience and Sustainability DIWA - - PowerPoint PPT Presentation

The Philippine Economy Towards Resilience and Sustainability

DIWA C. GUINIGUNDO

Deputy Governor Bangko Sentral ng Pilipinas

2019 Pre-SONA Economic and Infrastructure Forum

1 July 2019 Philippine International Convention Center

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MAINTAINING A MANAGEABLE INFLATION ENVIRONMENT

Headline inflation is within target for the first five months of 2019

Sources: BSP, PSA, IMF, and ADB

Growth and inflation forecasts Market rates have adjusted to BSP policy moves

2019 2020 ROP Official Targets Real GDP, % (March 2019) 6.0-7.0 6.5-7.5 Inflation, % 2.0-4.0 2.0-4.0 BSP Forecast, % (2012-based)* 2.7 3.0 IMF (April 2019) Real GDP, % 6.5 6.6 Inflation, % 3.8 3.3 ADB (April 2019) Real GDP, % 6.4 6.4 Inflation, % 3.8 3.5 *20 June 2019 MB meeting

0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00

Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2016 2017 2018 2019

Percent

BSP and Market Interest Rates

OLF Policy Rate ODF 7-day TDF 28-day TDF 14-day TDF IBCL rate 3-month GS rate

Peak: 6.7% (Sep. 2018) Latest (2019): 3.2% (May. 2019) 3.6% (Jan-May 2019)

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MANAGEABLE EXTERNAL PAYMENTS POSITION ANOTHER BUFFER AGAINST EXTERNAL HEADWINDS

Source: BSP

Strong growth in goods imports led to narrowing of current account; impact tempered by sustained receipts from traditional sources

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MANAGING THE COUNTRY’S EXTERNAL DEBT

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PROMOTING A STABLE AND SOUND BANKING SYSTEM

Source: BSP

Solid asset growth Improved quality of loan portfolio Sustained profitability Strong capitalization well above International norms

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MAINTAINING A SAFE AND RELIABLE NATIONAL PAYMENTS AND SETTLEMENTS SYSTEM National Retail Payment System (NRPS)

50 participating institutions 27 participating institutions

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LEGISLATIVE LANDMARKS

 BSP Charter Amendments: Pres. Rodrigo R. Duterte has signed into law “Republic Act

• No. 11211, or An Act Amending Republic Act No. 7653, Otherwise Known as the ‘New

Central Bank Act’, and for Other Purposes,” on 14 February 2019.  Enactment of the Payment Systems Act: On 30 October 2018, President signed into law a landmark legislation that provides for the oversight, regulation and supervision of payment systems in the country, Republic Act (RA) No. 11127 or the National Payment Systems Act (NPSA).  Enactment of the bill exempting from taxes the sale to the BSP of gold produced from small scale mining activities: RA. No, 11256, or An Act to Strengthen the Country’s Gross International Reserves (GIR), was approved by Congress and signed by President Rodrigo R. Duterte last 29 March 2019.  Bill on the Enactment of Islamic Banking in the Philippines: This bill aims to develop a suitable legal and regulatory framework to promote a truly responsive Islamic banking system that positively complements the existing conventional banking system in the country.

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SUSTAINING ADVOCACIES

 National Strategy for Financial Inclusion (NSFI): provides the national vision for financial inclusion and a platform for public and private sector coordination to ensure synergy of efforts in achieving shared objectives.  Microfinance: As of Dec 2018, there are 159 banks with microfinance

• perations

serving 1,986,683 micro- entrepreneurs.  Economic and Financial Learning Program (EFLP): In 2018, 3 learning programs, 1 Fin-ED Expo (1,000 participants), and 28 Financial Empowerment Seminars (3,400 participants) were conducted.  Credit Surety Fund (CSF) Program: More than 50 CSFs have been established nationwide benefitting nearly 18 thousand MSMEs .

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PHILIPPINE ECONOMY ON ITS WAY TO UNLOCKING FURTHER ITS GROWTH POTENTIAL

• Expanding further PH’s productive capacity to allow it to keep up with robust demand

Source: PSA

Employment Share by Class of Workers Employment Share by Educational Attainment

Incremental Capital-Output Ratio Total Factor Productivity

Source: Staff estimates as of 25 January 2019

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Impact of US Fed rate adjustments Infrastructure gaps Ratcheting up of trade tensions Global economic slowdown Disruptive technologies Extreme weather events Policy uncertainty and geopolitical tensions (e.g. US- Iran, Brexit, etc.)

KEY RISKS AND CHALLENGES AHEAD

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BSP geared up for the road ahead

Bangko Sentral ng Pilipinas Price stability Financial stability

Efficient payments & settlements system

70 years of Central Banking

The Philippine Economy Towards Resilience and Sustainability

DIWA C. GUINIGUNDO

Deputy Governor Bangko Sentral ng Pilipinas

2019 Pre-SONA Economic and Infrastructure Forum

1 July 2019 Philippine International Convention Center