MANILA, Philippines — The Philippines is encouraging Spanish investors to do business in the country on the back of its strong macroeconomic fundamentals and strong rebound from the impact of the COVID-19 pandemic, outgoing Bangko Sentral ng Pilipinas Governor Benjamin Diokno said.
Diokno told participants of an investor roundtable discussion in Spain organized by Banco Bilbao Vizcaya Argentaria (BBVA) that the Philippines has successfully managed the COVID-19 health crisis on the back of strong fundamentals built through decades of structural reforms and sound macroeconomic management.
“We thank our partners in Spain who have played significant roles in the Philippine economic narrative. And for those who have yet to do business with the Philippines, we urge you to take a look at our promising economy as we soar to new heights, Diokno said.
With much-relaxed mobility and activity restrictions after managing the spread of the deadly disease, the country booked a faster-than-anticipated gross domestic product (GDP) growth of 8.3 percent in the first quarter of the year versus the 7.8 percent expansion in the fourth quarter and 3.8 percent contraction in the first quarter of last year.
“We plan to ride this strong growth momentum in the incoming administration, both by leveraging country-specific strengths and deepening our regional linkages, especially within ASEAN,” Diokno said.
The incoming finance secretary pointed out that Spain has been an important ally of the Philippines, contributing to the country’s trade growth and supporting initiatives such as the Build Build Build program.
After surging by 54 percent to hit an all-time high of $10.51 billion last year, the net inflow of foreign direct investments (FDIs) grew by eight percent to hit $1.7 billion in the first two months of 2022.
Likewise, Diokno cited the fact that manufacturing activity has strongly rebounded with the purchasing managers’ index (PMI) hitting a four-year high of 54.3 in April.
From a peak of 17.6 percent in April 2020, the BSP chief said unemployment rate was down to just 5.8 percent in March this year and is now close to pre-pandemic level.
According to Diokno, the Philippines continues to enjoy healthy external accounts, with a hefty gross international reserves (GIR) serving as buffer during the global health crisis.
Diokno said the country continues to maintain a market-determined exchange-rate policy as the peso depreciated by close to three percent from its end 2021 level.
“This mirrors the market sentiment affecting all emerging markets across the globe, amid the Russia-Ukraine conflict. The movement of the peso is within the range of the national government’s macroeconomic assumptions for the year,” Diokno said.
Using its foreign exchange buffer, the central bank intervenes in the foreign exchange market to ensure orderly market conditions and to prevent excessive short-term volatility in the exchange rate.
Diokno said the outgoing administration of President Duterte sustained the reform momentum with the passage of the Corporate Recovery and Tax Incentives for Enterprise (CREATE) Act, the amended Retail Trade Liberalization Act, the Foreign Investments Act, and the Public Services Act.
“These gamechanging reforms will help stimulate the economy, generate more jobs, improve basic services to Filipino consumers and allow for the exchange of skills and technology with the country’s foreign partners,” Diokno said.
Diokno said the Philippines is currently in a demographic sweet spot, with a median age of 25.7, as well as a manpower pool of 45 million well-educated and hard-working workforce.
The BSP chief also cited that S&P Global Ratings, Moody’s Investors Service, and Fitch Ratings have affirmed the country’s investment grade rating despite the sea of downgrades during the height of the COVID-19 pandemic.