Good second quarter for RP: exec
MANILA – An official of the Bangko Sentral ng Pilipinas sees continued growth of the domestic economy in the second quarter of this year.
“It will be a good second quarter, because of the electoral cycle for one, and we think that there is still some base effect of the low growth numbers last year,” BSP Assistant Governor Cyd Amador told reporters.
The Philippines surpassed expectations after registering a higher-than-expected 7.3 percent growth, as measured by gross domestic product, in the first three months of this year
This was attributed to strong consumption on account of, among other factors, continued high inflows of remittances from Filipinos overseas because of the global economic recovery.
Amador said leading economic indicators are showing positive numbers but declined to give figures.
She added that monetary officials have a “good number” for the second quarter, but also did not elaborate.
“It’s consistent with the growth path of five to six percent of the DBCC,” she said.
The inter-agency Development Budget Coordination Committee is looking at a five to six percent growth this year, revised upwards recently on account of the growth output from January to March this year.
Relatively, monetary officials continue to see the rate of price increases to stay within the government’s 3.5-5.5 percent and three to five percent until next year.
BSP recently revised downward to four percent and three percent its inflation forecast for this and next year from 4.7 percent and 3.6 percent, respectively.
Amid the lower average inflation forecast, Amador said upside risks to inflation dominate the downside risks.
The upside risks include power and transport rate hike petitions and possible increase in global commodity prices but Amador said movement of current prices on these depends on how strong the global economic recovery is.
Thus, inflation movement is not seen to greatly impact on the central bank’s policy rate stance.
To date, BSP’s overnight borrowing rate is at record-low of four percent while the overnight lending rate is at six percent, both of which are steady since July 2009.
And since monetary officials see benign inflation path and inflation outlook remaining favorable, Amador said they “don’t see a sharp adjustment in interest rates.”
“So any adjustment in interest rates will be calibrated, not sharp which could add volatility to the markets,” she added.
International Finance Corp., a member of the World Bank Group, and GTZ, a German government development agency, are providing technical assistance to the BSP to strengthen its supervisory and regulatory capacity for lending to small and medium enterprises.
IFC and GTZ chose Deutsche Bank Risk Management Advisory to provide advisory services on risk management best practices.
Greater support from BSP examiners for commercial banks specializing in lending to small and medium enterprises is expected to increase much-needed credit flow to the sector.
A study last year by UPS Asia Business Monitor showed that more than 83 percent of small and medium enterprises in the Philippines have experienced difficulties in accessing credit from banks.
“Many banks are interested in using new products and risk assessment methodologies to profitably address the needs of small and medium enterprises,” said Will Beloe, IFC Head of Advisory Services in the Philippines.
“BSP recognizes this need and has made it a priority to develop a specialized team of small and medium enterprise experts.”
Commercial banks mostly lend to big businesses or salaried individuals, while rural banks focus on microfinance. This has given rise to the “missing middle” of small and medium enterprises with limited access to financial services.
BSP has successfully trained their examiners to specialize in supporting microfinance institutions, and is looking at similar training to support commercial banks’ small and medium enterprise lending operations.
“This project is important and is part of our efforts to share the latest risk-management techniques and technology with banks and regulators around Asia to strengthen the local banking systems and ensure their stable and continued growth,” Lukas van der Hoef, Head of Risk Advisory Services Asia at Deutsche Bank said.
IFC aims to increase access to financial services for small and medium enterprises globally.
This program is supported by the Canadian International Development Agency and the Australian Agency for International Development. GTZ supports the program through its Private Sector Promotion Program. PNA
