benjamin e diokno : the philippine economy - towards a more inclusive, a - rated economy speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at " financial paradigm shift : fintech and the future of philippine monetary policy ", a forum with the bsp governor by oxford business group and v & a law, manila, 28 january 2020. * * * ladies and gentlemen, good afternoon. i am honored to speak before all of you – organizational leaders and captains of industry. first of all, i would like to thank oxford business group ( obg ) for inviting me to this event. for many years, obg ’ s annual publication “ the report : philippines ” has provided a comprehensive and high - quality information on the philippine economy. my talk today will be divided into four parts. first, a quick review of the philippine economy ’ s performance in 2019. second, the outlook on the philippine economy for 2020 and beyond. third, the role of the bangko sentral ng pilipinas in achieving the economy ’ s goals. and fourth, as a conclusion, the philippines ’ potential to be recognized as an a - rated economy on the back of significant milestones achieved in recent years, robust growth prospects, and sustained commitment to critical structural reforms. the philippine economy in 2019 amidst a slowing global economy. 2019 was a good year for the philippines. the economy expanded by 6. 4 percent in the fourth quarter of 2019, bringing the full - year growth to 5. 9 percent. at this pace, the philippines remained one of the fastest growing economies and the most resilient in asia and in the world. last quarter ’ s growth marked the philippines ’ 84th consecutive quarter of uninterrupted growth, which shows it has remained resilient since the post - asian financial crisis years. from an average inflation rate of 5. 2 percent in 2018, it averaged 2. 5 percent last year — well within the target range of 2. 0 to 4. 0 percent. external payments position remained strong which served as a buffer for the economy against external shocks. as of end - 2019, the gross international reserves ( gir ) rose to its highest level ever at $ 87. 8 billion. this is equivalent to 7. 7 months ’ worth of imports of goods and services and payments of primary income. the received doctrine is that gir equivalent to 3 months of

imports is already sufficient. there was a reversal in the balance of payments ( bop ) position : from a deficit of $ 2. 31 billion in 2018 to a surplus of $ 7. 84 billion in 2019. this positive development was due to sustained growth of overseas filipinos ’ remittances, higher receipts from tourism and business process outsourcing ( bpo ), and net inflows of foreign direct investments. the banking system remained well capitalized and less exposed to bad debts. as such, it was able to further fuel the growth of the economy by financing more productive activities. capital adequacy ratio ( car ) of universal and commercial banks stood at 15. 6 percent on solo basis and 16 percent on consolidated basis as of end - september 2019, well above the bsp ’ s regulatory requirement of 10 percent and the internationally prescribed floor of 8 percent. economic growth has become inclusive. that ’ s welcome news. more and better jobs were created. in particular, the unemployment rate declined to 4. 5 percent in october 2019, the lowest 1 / 5 bis central bankers'speeches ever in recent philippine history. remarkably, poverty incidence dropped to 16. 6 percent in 2018 from 23. 3 percent in 2015, lifting nearly 6 million people from poverty over the three - year period. outlook for 2020 and beyond moving on from an encouraging 2019, we are optimistic that 2020 will be even better. although external headwinds abound, including trade conflicts, geopolitical tensions and risks due to climate change, the philippines ’ strong domestic demand, healthy external accounts, as well as ample monetary and fiscal space will help the economy withstand shocks. the government has officially set its economic growth targets at 6. 5 to 7. 5 percent for this year up to 2022. we believe this is achievable. development partners and private sector economists have forecasted that growth will also accelerate this year from last year ’ s 5. 9 percent. for instance, imf and adb expect growth to reach 6. 2 percent this year, while the world bank sees growth at 6. 1 percent. nomura expects growth at 6. 7 percent, hsbc at 6. 4 percent, and barclays and standard chartered at 6. 3 percent. growth is seen to be driven both by household consumption and investments. consumption is expected to remain strong, supported by remittances, tamer inflation, and better employment situation. the timely passage of the p4. 1 -