BSP optimistic PH to have modest economic growth in 2024
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NewsTranscript
00:00 Because money is so easy to squander and so hard to earn or come by, wish it grows in trees.
00:05 The default policy in savings or growing it is to be tight and safe, whether the inflation outlook is good or otherwise.
00:12 Our Soojin Kim tells us more on the Monetary Board's money policy stance now and moving forward.
00:18 The Monetary Board is continuing to take a more prudent approach in the policy stance given the substantial risk to the upside.
00:27 The board deems it appropriate to maintain policy settings sufficiently tight.
00:32 This even though the inflation outlook itself remains tilted to the upside or even when there is improvement in inflation.
00:39 The BSP is confident of a modest growth in 2024.
00:42 The impact of policy adjustment will be reflected in the rate of growth of the economy with the BSP eyeing some
00:49 moderation in the level of economic activity.
00:52 The decision to have a more hawkish position was made while taking the broadly unchanged inflation outlook into consideration.
00:59 The 3.2 inflation projection last November was sustained until February of this year.
01:05 Our inflation forecasts are slightly lower for 2024 and this is in recognition of the risk
01:11 partially diminishing, especially for this year.
01:17 Meanwhile, risk-adjusted inflation forecast for 2024 eased to 3.9% from 4.4 in November.
01:24 The forecasts are concentrated or are solidifying on the 3 to 4 percent range.
01:30 There is less uncertainty seen by serving economists.
01:33 The risks to inflation outlook continue to lean toward the upside, but inflation expectations are mostly steady and anchored to target.
01:41 Meanwhile, domestic economic activity is seen to remain in tap over the medium term.
01:46 The fourth quarter gross domestic product or GDP numbers are within expectations.
01:51 Domestic recovery is also likely to continue in the next few quarters.
01:55 The upside risks to inflation are largely due to increased electricity rates, higher transport charges,
02:01 higher oil and domestic food prices, as well as the additional impact on food prices due to El Nino.
02:07 There are still risks that we see that could happen and further push inflation out of the target range.
02:17 So I think if we see some improvement, then there could be some consideration.
02:21 So basically we look at domestic developments, barring any further shocks that could affect inflation trend in the future.
02:33 Although government interventions to mitigate the impact of the El Nino is the primary downside risk to the outlook,
02:40 the BSP emphasizes that the effort to increase productivity in the rice sector,
02:45 including the distribution of drought-resistant seeds, the salience of rice prices,
02:50 the recent agreement with Vietnam to secure rice supply over the next five years, are steps in the right direction.
02:57 Economic Research Director Dennis Lapid also eyes better weather conditions in July.
03:02 The additional impact of possible further declines in crop production,
03:08 particularly for rice and corn due to the strong El Nino conditions,
03:12 strong El Nino episode will be mostly confined to the first quarter of this year.
03:17 And we're likely to see ENSO neutral weather conditions by the middle of this year.
03:23 Moreover, monetary and economic sector in charge,
03:26 Iluminada Sikat, says the recession in Japan and the proposed increase in private sector wages will only pose a threat
03:32 if they turn out to be higher than what the board had anticipated.
03:36 Meanwhile, the BSP continues to support the national government's non-monetary measures
03:40 to address supply-side pressures on prices and sustain the disinflation process.
03:45 The Banco Central ng Pilipinas remains ready to adjust its monetary policy settings as necessary to safeguard price stability.
03:54 Moreover, the monetary policy report will be available on the BSP's website tomorrow.
04:00 Soojin Kim from the National TV Network for The New and Better Republic.