Central banks sees improved long-term prospects

LONG-TERM growth prospects for the Philippines will improve in the near term owing to expected gains in governance and macroeconomic stability, the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.

BSP Governor Amando Tetangco Jr. said that the Philippine economy has been growing at a “fairly respectable pace” even in the midst of the global financial crisis in 2008-2009.

“It is to our expectation that the stable macroeconomic conditions will continue to attract foreign investments, both foreign and portfolio. We have created a stable and predictable system that should convince and help investors to decide in favor of the Philippines,” he said during the Global Finance Roundtable. For the full year 2011, the Philippine gross domestic product (GDP) increased by 3.7 percent, down from 7.6 percent in 2010.

An indicator of economic performance, GDP measures the amount of goods and services produced in a country in a year.

Economic managers, however, said that economic activities, specifically external demand, may be adversely affected by lingering financial uncertainties in the euro zone, where a large number of overseas Filipinos are based.

“No country is immune. However, we also have buffers of resilience in the Philippines. I have mentioned low and stable inflation rate, balance of payments surplus, all time high reserves, sound and stable banking system that continued to be an effective financial intermediary from sources to users of funds. We closely monitor possible impacts of external developments to growth and inflation,” Tetangco said.

Economic managers added that the trend appreciation of the peso against the dollar will also mitigate the stimulatory effect of remittance inflows on consumption spending.

“Peso has been closer to the lower end of the range of volatility,” Tetangco said. The central bank, meanwhile, said that the business process outsourcing industry is one of the “bright spots.”

“Our cost structure and manpower is still the best value for outsourcing,” he said.

Data from the BSP showed that the industry is now averaging at least $10 billion, which employs 800,000 highly educated workers.

The Business Process Association of the Philippines projects the sector to generate at least $25 billion in export revenues by 2016 and employ 1.3 million workers.