Third-quarter growth likely to hit 7 percent–BSP
Maricel E. Burgonio, Reporter
Manila Times
THE Bangko Sentral ng Pilipinas (BSP) said third-quarter economic growth, as measured by the country’s gross domestic product (GDP), will come in above 7 percent, adding it could match the second-quarter expansion.
“The growth is likely to be in the 7-percent range,” Governor Amando M. Tetangco Jr. of BSP, told reporters.
The BSP expects strong capital and remittance flows, which provided liquidity to support GDP growth, to further boost consumer demand.
Tetangco said the recent cut in the BSP’s overnight rates would encourage more investments. The central bank’s overnight borrowing and lending rates stand at 15-year lows of 5.50 and 7.5 percent, respectively.
“Our current macro conditions are the most favorable in years. We are hoping that the private sector would take advantage of this and the current low levels of interest rates to expand capacity,” he said.
The BSP chief said credit for investment demand should increase as a means of absorbing the excess liquidity arising from strong dollar inflows. “This would be in-step with our last move to lower interest rates,” he said.
“We are still at an M3 growth rate that is consistent with a favorable and benign inflation outlook,” he said, referring to the expansion of the country’s money supply.
The growth of domestic liquidity slowed down to 11.4 percent year on year in September from 14.9 percent in August, to reach P2.9 trillion.
“I would agree though that very low levels of liquidity growth may not be consistent with sustained GDP growth at the same or higher pace,” Tetangco said.
The Development and Budget Coordinating Committee forecast GDP growth to reach 6.1 to 6.7 percent this year. The BSP forecast faster expansion at more than 7 percent.
In the first half of the year, the country’s GDP grew 7.3 percent, primarily driven by consumer demand fueled by remittances, which are seen to reach $14.7 billion this year.
Socioeconomic Planning Secretary Augusto B. Santos earlier said GDP may have expanded between 6.1 and 7.1 percent in the three-month period ending September.
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