Question: Which sectors of the economy do you expect to lead the rebound, and what role do you expect that foreign investment will play?
The demand for products and services under the new normal will likely drive the economic rebound. This is particularly the case for services, which have traditionally been more resilient to economic downturns.
The construction industry will likely lead the rebound, as demand for housing and infrastructure are key drivers of economic activity.
The energy sector will also lead the rebound, as demand for energy services is a key driver of economic activity.
The manufacturing sector will also lead the rebound, as demand for manufacturing is a key driver of economic activity.
The financial services sector will likely lead the rebound, as demand for financial services is a key driver of economic activity.
Question: What is the biggest risk to the economy, and what should policy makers do to address it?
There are a number of risks to the economy, including:
The risk of an extended period of low growth and high unemployment, which will further increase the risk of an economic downturn.
In this situation, foreign direct investment (FDI) will play a key role in supporting the economic rebound.
Question: What is your assessment of the possible effects of the recently passed tax reform package on the overall economy?
The new tax reform package is expected to improve the country’s fiscal position, as it will provide for a gradual reduction of the corporate income tax rate from 32% to 30%, while also reducing personal income tax rates. This will provide for a more stable fiscal position, as well as a more competitive tax regime.
In this situation, the Bangko Sentral ng Pilipinas (BSP) will also be able to step up its lending to support the recovery.
The BSP is also expected to extend its monetary policy easing measures. We will be providing liquidity for banks to support credit growth. We will also be gradually raising our benchmark interest rate. The BSP has been easing policy for some time now. In the near term, we will continue to support credit growth and strengthen the banking system, and, in the medium term, we will continue to gradually raise our benchmark interest rate.