No need to tweak monetary policy setting for now–BSP

The Bangko Sentral ng Pilipinas (BSP) does not see the need to adjust its monetary-policy stance in the next Monetary Board meeting in December, even with the country’s lower-than-expected growth in the third quarter.

In a statement sent to reporters following the release of the gross domestic product (GDP) growth in the third quarter of the year, BSP Governor Amando M.  Tetangco Jr. put on yet another hawkish tone, saying the current policy condition is enough to support further economic activity in the country toward the end of the year.

Tetangco also expressed hopes that the government will resolve its issues on the disbursement of
expenditures—the major factor being pointed out by analysts as the reason behind the slow growth in the third quarter of the year.

“While GDP surprised on the downside, we expect GDP would continue to be buoyed by private consumption as the national government clears up spending bottlenecks,” Tetangco said.

“With the inflation outlook generally manageable over the policy horizon, the BSP’s current policy stance should be able to help keep economic activity supported.”

Similarly, in a statement sent by the governor on expectation of lower inflation in November, Tetangco also said that “there is room for the BSP to pause and keep its current stance of monetary policy.”

The Philippine Statistics Authority announced on Thursday that the Philippine economy faltered to a slower growth from July to September this year, to hit 5.3 percent during the period.

This is slower than the 6.4 per-cent seen in the previous quarter.

“The Philippines posted a disappointing 5.3-percent third-quarter GDP growth, as the usual drivers of the economy were unable to counterbalance the ineptitude of the national-government spending,” Bank of the Philippine Islands
associate economist Nicholas Antonio Mapa said.

“Government spending, or the lack of it, has been the disappointment of the year, as many had predicted massive construction of [Supertyphoon] Yolanda-devastated areas, as well as a pickup in infrastructure upgrades to increase productivity. Overall, government spending was a drag on growth, with -0.3 percentage points to the GDP print,” he added.

Mapa further said the contribution of “net exports” on the expenditure side of GDP is viewed as “artificial”, as the Manila port congestion continues to hound the flow of imports.

With the current average of the country’s GDP in the first nine months of the year at about 5.8 percent, the country must hit a growth rate of 8.7 percent in the last three months to hit the government’s target of 6.5 percent to 7.5 percent.



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