Economy to remain upbeat despite temporary hiccup

CEBU, Philippines - Upbeat economic performance and rosy prospects in the Philippines are seen to continue their hold despite the calamities that happened in the country, the Bangko Sentral ng Pilipinas (BSP) assured.

“Despite the calamities, the GDP [gross domestic product] could remain within target. Infrastructure spending from public and private sectors is expected to remain robust. Some disruption could arise due to calamities, but inflation is expected to remain within three to five percent,” said BSP assistant governor Cyd N. Tuaño-Amador in her recent visit to Cebu.

BSP officials led by Amador, together with economic experts were here to conduct the a conference dubbed “Gearing Up for External Competitiveness” mostly attended by bankers, exporters and businessmen.

According to Amador, the strong first half performance of the Philippines will offset the temporary economic hiccup brought about by the two major calamities that happened in the Visayas region — the earthquake that hit the Bohol province and super typhoon Yolanda that devastated the provinces of Leyte, Samar and Northern Cebu.

The country’s strong economic backbone is fueled largely by the strong credit activity and upbeat consumer morale.

She said the Philippine economy has always been strengthened  by the domestic spending and consumption and that the economy has always been market-driven.

While the tourism sector and some industry players are apprehensive of the immediate negative effect of the almost simultaneous calamities that caught the attention of the world, Amador said the Philippines will continue to follow the path of good economic journey. In fact, foreign exchange rate is seen to remain stable.

Amador said peso is seen to settle in “relative stability” level, basing on the experiences of the country in calamities such as Ondoy and Peping in 2011 and 2012.

During calamities, she said, remittances from Overseas Filipino Workers (OFWs) are expected to spike. Today, with many countries committing to help the Philippines and its affected areas, institutional transfers will swell. However, this oversupply of dollar in the country will also be offset by the strong demand for capital goods for rebuilding such as heavy machineries, generators sets, and construction materials, among others.

But Amador said the foreign exchange movement is not only driven by the flow of dollars coming in and the balance of trade in the country. There are also some factors, he said, that affect the plight of the exchange rate like the US economic activity and the whole global interplay.

With dollar-based donations coming in and re-construction of buildings, houses, and infrastructure following after the natural devastation, GDP target is on track and rosy prospects are not threatened.

During the half-day conference, BSP officials and bankers also tackled on the importance of hedging for exporters in order to sustain the country's competitive advantage in the global market.

According to Ramon L. Clarete, dean of UP School of Economics, the Philippines has to strengthen its import and export sectors to sustain economic growth, which he described as "positively climbing lately." /JMD (FREEMAN)