Q2 results prove economy can absorb hike in policy rates - BSP

By Bianca Cuaresma, BusinessMirror

Posted at Aug 29 2014 09:17 AM | Updated as of Aug 29 2014 05:17 PM

MANILA -- Accelerated growth, measured as the gross domestic product, in the second quarter proved the central bank’s assessment that the $270-billion economy has enough momentum to push ahead no matter the adjustments in the policy rates, the Bangko Sentral ng Pilipinas (BSP) said.

In a statement following the Philippine Statistics Authority’s announcement of continued and higher growth in the April-to-June period, central bank Governor Amando M. Tetangco Jr. lauded the country’s performance, saying the continued economic expansion gave the BSP ample policy space to make appropriate adjustments as and when required.

“The robust second-quarter growth despite strong base effect shows the country’s continued resiliency,” Tetangco said.

“It, likewise, backs the BSP’s view that the economy has the capacity to absorb the recent adjustments in policy settings,” Tetangco added.

The Philippines bounced back from lackluster growth of just 5.6 percent, as revised, in the first quarter to 6.4 percent in the second quarter. This brings the first-half figure to 6 percent and one of the fastest in the region.

Compared to the first half of 2013, however, the January-to-June output still pales in comparison with more than 7-percent growth in the first quarter of 2013.

The government earlier targeted growth ranging from 6.5 percent to 7.5 percent, higher than last year’s target of 6 percent to 7 percent.

With the first-half numbers in place, the Philippines has to expand by at least 7 percent in the second half to hit the low end of the target range.

“The BSP will continue to monitor developments and will make further adjustments, as necessary, to help keep inflation within the government’s target range over the policy horizon,” Tetangco said.