Philippine economy ready to face external headwinds in 2016

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) believes the country’s sound macroeconomic fundamentals would serve as inherent stabilizers to fend off external shocks brought about by the normalization of interest rates in the US and China’s economic slowdown.

BSP Governor Amando Tetangco Jr. said in his address during the first meeting of the Tuesday Club at the EDSA/Shangri-La Hotel, 2016 is expected to be another challenging year for the economy.

Tetangco said positive growth prospects and solid macrofundamentals would be the overriding pull factors to keep the economy steady on its course over the near and medium terms.

“It is important therefore that we remain nimble and flexible in the face of shifts in our operating environment. We need to work toward achieving what, in aerodynamics, is called dynamic stability,” he said

In aerodynamics, Tetangco said dynamic stability describes how an aircraft behaves when its original flight is interrupted. In particular, it refers to the plane’s ability to oscillate and use inherent restoring characteristics to stabilize.

Tetangco said 2015 was another challenging year for global policymakers amid the uneven global economic growth, the sharp drop in oil prices, and volatile global financial markets.

In the domestic front, Tetangco said policymakers were confronted with challenges related to lower-than-programmed government spending during the first half of 2015; concerns brought by the intensification of the El Niño weather phenomenon; the broad decline in exports as a result of sluggish external demand; and the weakening of peso against the dollar.

Despite the challenges, Tetangco said the country’s gross domestic product (GDP) growth accelerated to six percent in the third quarter of 2015 from the revised 5.8 percent in the second quarter making the country one of the fastest-growing economies in Asia.

This brought the GDP expansion to 5.6 percent in the first nine months of 2015, way below the seven to eight percent growth penned by economic managers.