Despite several interest rate hikes introduced this year, the central bank expects loan growth to stay strong — thanks to a positive outlook on the local economy. Fitch Ratings, however, says “excessive” credit growth poses an overheating risk to the country. The BSP’s monetary board made five consecutive rate hikes from May to November in an attempt to rein in inflation expectations, the most aggressive tightening move by the BSP in over a decade.
Meanwhile, the Bureau of the Treasury reported this week that the national government’s fiscal gap grew more than fourfold in November, amounting to P39.1 billion, 354 percent higher than the P8.6 billion recorded a year before. Tax and non-tax revenues came in at P259.7 billion, while spending for items like infrastructure and other capital outlays grew 18 percent to P274.2 billion, with interest payments growing 20 percent to P24.7 billion.
With the looming midterm elections, the nation’s economic managers will be discussing next month ways to mitigate the economic impact of the election-related public works ban and a potentially reenacted budget. Congress failed to ratify a new budget before their month-long holiday break this year. Experts believe that should government miss their new deadlines in the coming weeks, we could see a 1.1 to 2.3 percent cut in economic growth in 2019.