benjamin e diokno : the philippine economy - a story of cautious optimism speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the wallace business forum, makati city, 19 june 2019. * * * wallace business forum ( wbf ) managing director gary teves, distinguished officers and members of wbf, esteemed guests, ladies and gentlemen, good morning. i am pleased to address you in this forum organized by the wallace business forum. your continued interest in the philippine economy has greatly helped in shaping the quality of information provided to the international community. events such as this offer the bsp an excellent opportunity to engage with various stakeholders in policy dialogue and discuss the developments in our core mandate of promoting price stability and financial stability as well as our views on the current challenges we are facing. let me begin my speech with the concept of a goldilocks economy, a state of having a “ just right ” mix of high growth and low inflation. has the philippines entered this state? the answer is definitely yes. allow me to clarify. there has been an encouraging development in the decelerating trend in inflation. this has allowed us to reduce the interest rate on the bsp ’ s overnight reverse repurchase ( rrp ) facility by 25 basis points to 4. 5 percent in our latest policy meeting held last may 2019. this decision was aimed at helping inflation move towards the middle of the target range and give due consideration to growth, in line with the bsp ’ s flexible approach to inflation targeting. in addition, although the country experienced lower - than - expected growth for q1 2019 at 5. 6 percent, growth is expected to pick up in the second half of 2019 with the catch - up government spending plan. let me emphasize that the country ’ s economic expansion streak is now 81 quarters, which translates to more than 20 years of uninterrupted growth. in terms of the bsp ’ s outlook for inflation, our latest baseline projections in may indicate that inflation will likely settle within the target range of 3. 0 percent ± 1. 0 percentage point for both 2019 and 2020. this positive alignment between growth and inflation has been a constant narrative and is expected to further lend support to the country ’ s long - run growth momentum. both liquidity and credit conditions in the country continue to be in line with the country ’ s overall economic growth. as

move away from globalization towards the rise of protectionist policies such as the protracted trade tensions between the us and china. while the philippines is not directly affected with the tariff impositions, the continued trade friction could take its toll on the country ’ s external sector. fourth, there is also the so - called rise of the fourth industrial revolution. while technological innovation in itself is not bad, and indeed often brings benefits, the velocity and depth of transformation could have potentially disruptive effects, especially in the short term. in fact, rapid technological innovation has already ushered in broad structural economic changes that policymakers are only just beginning to understand. certainly, this would have significant impact in the conduct of economic policy and the way we do business. on top of these global risks, we also have to deal with the infrastructure gap on the domestic front. nonetheless, despite these risks, we are cautiously optimistic that the philippine economy is poised to sustain its growth momentum amid lingering global headwinds. let me close by assuring everyone that the bsp will continue to adhere to sound policies and remain focused on its mandate. you can continue to count on us to remain steadfast in our primary objective of price and financial stability, factors that reinforce the vibrant investment environment. having said all these, i am looking forward to a productive, open, and stimulating discussion with you and will be receptive to your insights. thank you and mabuhay. 3 / 3 bis central bankers'speeches