WHILE foreign and domestic experts debate on the likelihood of the Philippines going into recession, the Bangko Sentral ng Pilipinas (BSP) remains focused on sustained growth instead.

In an e-mail to financial reporters, BSP Governor Amando Tetangco Jr. said the key consideration was not where or when the Philippines will bounce back from the economic downturn.

He said timing the recovery was difficult to pin at this point, but told reporters they are on the lookout for the return of confidence lost when the global economy took a downward spiral in the wake of the subprime-mortgage mess in the United States.

“As the current financial crisis primarily had been a crisis of confidence, recovery will also be driven by improvements in consumer and business confidence. Any recovery in global demand will greatly influence the recovery process,”   Tetangco said.

If the mood of the business sector is a yardstick, an argument could be made that confidence is gaining strength.

The number of businessmen with pessimistic views on the local business climate still outnumbers optimists under the most recent business-expectations survey conducted each quarter by the BSP.

In that survey, the ranks of pessimists improved in the second quarter as their number thinned to just negative 2.6 percent from deep negative 23.9 percent three months earlier.

Tetangco traced the improvement in business sentiment at that time to “improving confidence in the US and global financial markets.”

The business confidence index of negative 23.9 percent in the first quarter was the lowest since the BSP started taking the survey in the first quarter of 2002.

Consumer confidence, however, surged forward by 1.5 percent at end-March this year as ordinary Filipinos took out real-estate loans, used their credit cards and even purchased cars in increasing frequency than previous.

Consumer loans as reported by all types of banks registered with the BSP lifted by 1.5 percent to P385.8 billion during the month.

Tetangco said domestic recovery also had to happen in tandem with the recovery in markets and economies overseas.

“Overall, any real economic-growth momentum would have to be a careful balancing of growth drivers from both external and domestic demands,” he said.

Likewise, countercyclical support to aggregate demand in the form of expansionary fiscal and monetary policies, along with strong policy actions to ensure financial and corporate sector health, could contribute to faster recovery, Tetangco added.

“Maintaining an expansionary monetary-policy stance to the extent that the inflation outlook allows could support market confidence and assure households and businesses that risks to macro stability are being addressed decisively,” he said.