BSP sees growth under new govt

T HE Bangko Sentral ng Pilipinas (BSP) remains optimistic the Philippine economy would continue to grow even under the new administration.

Because of the improved Covid-19 situation in the country, BSP Governor Benjamin Diokno is optimistic the second-quarter economic expansion will be much better than the faster-than-expected 8.3-percent gross domestic product (GDP) growth in the first three months of the year.

Another reason for Diokno’s optimism is that the country will experience a seamless transition of power, as the winning candidate has an overwhelming majority for the first time in history.

“He has the support of the electorate, and the Filipino people elected a team. In the past, we elect the president from one party and the vice president from another party, that has been the pattern,” he told participants of a webinar organized on Friday by ADB Institute, the Asian Development Bank’s think tank based in Tokyo, Japan.

“With that overwhelming mandate — plus they are working as a team and, in fact, their senatorial slate I think only one from the opposition won — they have a very solid legislature and a strong mandate,” he said.

The BSP chief also underlined that the new administration has said that it will continue the current administration’s goal of improving the country’s infrastructure.

He applauded the remark, emphasizing the importance of infrastructure in expanding and improving the economy’s capacity while also creating jobs.

Infrastructure spending as a percentage of GDP averaged 4.6 percent from 2016 to 2020. Diokno added that actual infrastructure investment in 2021 reached P1.12 trillion, or 5.8 percent of GDP.

Apart from infrastructure, he advised the new administration to maintain the government’s human capital investment.

“We should continue to invest in human capital. We have a very young population. The median age is 25, and in an aging world, that is an asset. So, we have to invest in them, so that the future of this country will be much, much better,” he said.

Finally, Diokno said the future administration will inherit structural reforms implemented by the previous administration, which will make the Philippines more competitive and appealing to investors.

He cited the Corporate Recovery and Tax Incentives for Enterprises Act, which reduces corporate income tax and streamlines the fiscal incentives system, as an example.

Furthermore, Diokno said that three historic laws were passed to further open the Philippines to foreign businesses. The Retail Trade Liberalization Act, the Foreign Investments Act and the Public Services Act have all been amended.