THE central bank governor remains bullish about the economy in 2020, noting that inflation remains “subdued,” and that growth assumptions will not be significantly dented until oil prices hit $90 per barrel.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno also downplayed risks to the economy coming from the looming Iran crisis and called on the public not to take on “alarmist” sentiments.
“Let’s not be alarmists here… For oil prices to make a difference in our forecast, it has to be $90 per barrel. And as you know what is relevant to us is the Dubai oil price… So let’s not panic,” he told reporters at the first meeting of the Tuesday Club in Pasig City.
The US carried out a drone strike in Baghdad last week which killed a senior Iranian general.
President Donald J. Trump said the US is prepared to strike Iran should it retaliate.
Inflation in December rose to 2.5% on seasonal demand for holida goods as well as weather-related disruptions to the supply chain, according to the Philippine Statistics Authority.
This is the second successive month of higher inflation after the indicator came in at 1.3% in November.
Average inflation in 2019 was 2.5%, down from 5.2% in 2018.
The BSP’s forecast range for inflation is 2-4% for 2020.
At the height of oil fears in September due to the attack on a Saudi Aramco facility, Mr. Diokno said that the inflation target will only be reconsidered when oil prices exceed $85 per barrel.
He also assured that there should be no worries on the remittance front as the Middle Easter work force is based mostly in “Saudi Arabia more than Iraq and Iran.”
According to the BSP, cash remittances in October rose 8% year-on-year to $2.671 billion.
The growth rate was the highest since the 8.7% logged in October 2018.
Top Middle Eastern sources of remittances in October were Saudi Arabia, the United Arab Emirates, and Kuwait. These three along with Singapore, Japan, the UK, Canada, Germany and Hong Kong make up 78.4% of cash remittances from overseas workers.
“I am confident that the quality of life of Filipinos will further improve this year. Economic growth will be faster. Inflation will continue to be subdued and on target,” Mr. Diokno said.
Gross domestic product (GDP) growth was 6.1% in the third quarter bringing the nine-month average to 5.8%, still below the government’s 6% target.
In 2020, the government targets 6.5-7.5% economic growth. — Luz Wendy T. Noble