Finance Secretary Ralph Recto said he is confident that Philippine economic growth would hit at least 6 percent this year.
In an interview with Bloomberg TV on Wednesday, Recto said he is banking on more interest rate cuts, infrastructure spending, and election-related spending to boost economic growth.
“We’re pretty confident that we would hit at least a 6 percent growth. The World Bank, the IMF (International Monetary Fund), and many other institutions are saying that we’re on track to 6 percent. Our macroeconomic fundamentals are very good,” said Recto.
“Unemployment is down. The middle class is growing. We’re investing more than 5 percent of GDP (gross domestic product) in infrastructure. We have elections also right now, and during elections, there’s more spending, so we’re pretty confident we hit at the very least 6 percent this year.
He said with inflation settling within the government’s 2 percent to 4 percent target range, the Bangko Sentral ng Pilipinas (BSP) has room to further reduce policy rates, which in turn, would boost consumer spending.
“Equally important, I suppose, is the reduction of interest rates. It would appear that, because inflation has been controlled in the Philippines and the inflation today is something like 2.5 percent, there is room for a rate cut in our next (meeting) so we’re in an easing cycle. It’s a high probability that we could do a rate cut also for in our next meeting,” he said.
The Monetary Board of the BSP has so far cut rates by 75 basis points last year.
Recto said he is hoping that the BSP Monetary Board would deliver a 50 to 75 basis point cut this year.
“Hopefully, at the minimum 50 and probably 75 basis points, for the year that will help propel growth, consumption, and investments moving forward,” he said, adding that the rate cuts would boost economic growth by at least half a percent.
Recto, however, noted that a possible slowdown in global growth is a risk to growth.
“Well, the headwind (is), global growth may slow down, but like I said, 72 percent of our economy is domestic, consumption-driven. So far, our BPO industry is growing. Our OFW (overseas Filipino worker) remittances continue to grow. We hope that’s not affected by these headwinds, as well. Tourism is improving,” said Recto. (PNA)
