By Chino S. Leyco
Despite the continuing rise in inflation, the Philippines’ macroeconomic fundamentals remain strong while its growth outlook is still positive, the Department of Budget and Management (DBM) said.
In his presentation before the European, Italian, and other Hong Kong-based businessmen, Budget Secretary Benjamin E. Diokno said that investment opportunities in the Philippines remain rosy.
At the “Investing and Doing Business in the Philippines” forum, organized by the Italian Chamber of Commerce in Hong Kong, Diokno highlighted that the nation’s resilient growth even with its slightly elevated inflation this year.
In the first seven months of the year, the country’s inflation averaged 6.4 percent, above the government’s target range of 2.0 percent to 4.0 percent.
While inflation is exceeding expectations, the budget chief also said that the government’s budget deficit is very much under-control to support “effective” public spending and meet its debt obligations.
The country also enjoys “ample liquidity” to support economic activity, a strong external position, along with its sound and stable banking system, Diokno said.
Despite global and domestic challenges, Diokno said “the Philippine economy has gone a long way in cementing its resilience and building buffers over the years.”
With 6.7 percent gross domestic product (GDP) last year, Diokno said the Philippines continues to be one of “fastest growing countries in the world.”
“The benefits of such growth are widespread, with remarkable growth acceleration in the regions. In fact, nine regions grew faster than the National Capital Region (NCR) or Metro Manila in 2017,” Diokno said.
Diokno expects the growth trajectory to remain positive, with a target of 7.0 percent to 8.0 percent until the end of President Rodrigo R. Duterte’s term in 2022.
“This is to be achieved through an expansionary fiscal policy and a host of other economic reforms, which include the Ease of Doing Business law, the Comprehensive Tax Reform Program, the proposed Rice Tariffication law, the easing of foreign restrictions on Philippine Industries, and the Budget Modernization Program,” Diokno said.
The budget chief, meanwhile, highlighted how investor confidence has remained positive, with the Philippines maintaining its “investment grade” rating by three major credit rating agencies.
He also cited the Philippines’ successful return to the Samurai bond market and its inaugural issue of Panda bonds — “the first ASEAN sovereign to do so” — as evidence of strong investor confidence.
In 2017, the net foreign direct investments (FDIs) flow to the Philippines was at $10.05 billion, twice the country’s average from 2011 to 2016, which was around $4.7 billion.
In the first six-months of the year, the Philippines has attracted $ 5.7 billion in foreign direct investments, up by 42.4 percent year-on-year from the same period last year.
“There is a strong likelihood that we will exceed last year’s record-breaking US$10 billion in FDIs,” Diokno said.