The global economic landscape continues to undergo
transformation as far-reaching forces and global megatrends
exert their impact on markets and economies. These forces
include the rebalancing of the world economy, climate change,
disruptive technologies, and–what some analysts would
call– a retreat from multilateralism.
The unpredictable impact of these trends contributes to the
increased external uncertainty faced by the Philippine economy.
The challenge of formulating economic policy under such a
backdrop is keeping policymakers at the Bangko Sentral ng
Pilipinas (BSP) on their toes and edging them away from their
'business as usual' stance.
The good news is that despite the external headwinds, the
Philippine economy continues to buck the trend. Real GDP grew
by 5.6% in Q1 2019, making the Philippines one of the fastest
growing economies in Asia. This extends the country's streak of
20 consecutive years of uninterrupted growth.
The quality of growth should also be emphasised. Economic
expansion is driven by broad-based factors, with the
re-emergence of the industry sector, particularly
manufacturing, as another key growth driver alongside the
The positive alignment between growth and inflation has been
a sustained narrative. Achieving price stability amid a
challenging global and domestic environment is partly
reflective of the BSP's credibility as an 'inflation
In June 2019, inflation eased at 2.7%, bringing the
year-to-date average to 3.4% for the first six months of 2019.
Going forward, the BSP's latest baseline forecasts indicate
that inflation will continue to ease, settling within the 3.0%
± 1.0 percentage point target range for 2019 and
The low inflation environment, along with expectations of a
further slowdown in inflation momentum in the succeeding
months, is expected to lend strong support to various sectors
of the economy and steer the domestic economy towards the
national government's growth target for 2019.
Indeed, the Philippine economy has achieved a fine balance
between high economic growth and a benign inflation
Nonetheless, the BSP remains mindful of the uncertainty in
the rapidly evolving operating environment and continues to
enhance its conduct of monetary policy-making. In fact, the
recently amended BSP Charter has strengthened its capability to
promote low and stable inflation, the stability of the
financial system and the efficiency of the country's payment
systems. It also embodies a package of reforms that will
further align the BSP's operations with global best practice,
improve the BSP's corporate viability, and enhance its capacity
to craft proactive policies amid growing interlinkages within
the financial markets and the broader economy.
The BSP has also continued to introduce refinements in
monetary policy implementation under its Interest Rate Corridor
(IRC) system. These enhancements are aimed at further improving
the BSP's ability to respond to fluctuations in liquidity
conditions and strengthen the transmission of monetary
Rest assured, the BSP stands ready to go beyond 'business as
usual' to support a strong economy and promote a high quality
of life for all Filipinos.