Monday, 2 November 2009

BSP sees higher growth in 3rd quarter

BPO seen to grow 15-20% this year
Manila Bulletin

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said they expect economic growth in the third quarter is possibly higher than projected although they also expect the fourth quarter gross domestic product (GDP) growth to be slower due to the effects of the typhoons.

However, inflation is also seen to rise in the next two quarters because of higher prices of commodities such as rice and oil and mainly due to the high base the rates will be coming from year-on-year, Guinigundo said.

“The economy likely grew at a faster pace in the third quarter but could take a hit in the next quarter due to extreme weather disturbances that caused the death of hundreds and inflicted damages worth at least P31 billion,” Guinigundo said.

He explained that the growth drivers in the third quarter are remittances, exports, the business process outsourcing industry and investments.

“Remittances will remain to be a major driver. We saw how it continues to be robust, boosting consumption expenditure. We also saw some recovery in exports,” he added. The business process outsourcing industry is also expected to remain strong, growing by 15 to 20 percent for this year. “(BPOs) will provide employment and support consumption spending,” Guinigundo said.

The BSP, the main agent for inflation targeting, said the inflation outlook and expectations are relatively well anchored in the next two years and that it will provide it with policy flexibility. For 2009 and 2010, the central bank sees inflation falling in the lower end of its target.

“The main story is that inflation has continued to decline, averaging 0.3 percent from 3.2 percent in the previous quarter, largely reflecting base effects from significant increases in global commodity prices recorded during the same period last year,” Guinigundo said.

“The BSP believes that prevailing monetary settings are appropriately calibrated to the inflation outlook,” he added. “At the same time, it maintains its resolve to keep monetary conditions conducive to credit demand and investment activity. Nonetheless, the BSP stands ready to calibrate monetary settings depending on how the balance of risks surrounding growth and inflation prospects will evolve.”

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