Philippines Economy Strong Enough to Ride Out US Fed Hike, Says Dominguez

Finance Secretary Carlos Dominguez III expressed optimism that the country’s rock solid macroeconomic fundamentals along with the Duterte administration’s infrastructure buildup strategy will create enough fiscal and monetary buffers for the Philippines to ride out external shocks such as this latest move by the US Federal Reserve Board to raise interest rates.

Dominguez assured the public and the business community that the government is maintaining its growth targets for the short and medium term, as its priority programs are on course to keep the Philippines as one of Asia’s fastest-growing economies and make sure growth becomes a truly inclusive one.

“This Federal Reserve hike has long been anticipated,” he said, “and that speculation over this move has been one major cause of the market jitters that have riled financial markets across the globe in recent weeks.”Hence, he said, this normalization of the interest rate regime in the US will likely have a calming effect on the markets in the long haul. Dominguez expressed confidence that “the domestic economy remains strong and is resilient enough to ride out the initial impact of such an external shock as the Fed hike, more so with its commitment to go full steam ahead on its aggressive infrastructure program that will be a major growth driver on the Duterte watch.”Apart from filling the massive infrastructure backlog that has for decades now blunted the country’s global competitiveness as an investment haven, the government’s plan to spend a record P8 trillion on public infrastructure over the next six years will keep the domestic on its high growth path—and insulate it from external shocks,” he added.

National Treasurer Roberto Tan also pointed out that “the rate hike has long been anticipated” and that “the market would have to digest the impact of this move, including the foreseen three other rate increases for 2017 and expectation of new fiscal and economic policies of the Trump Presidency.”

But like the finance secretary, Tan said: “We remain confident that despite these external developments and market volatility, the country’s fundamentals and economic resilience will carry us forward.” “This Administration will continue to pursue its economic agenda including aggressive investments in infrastructure and broadbased social services,” he added. (DOF)