Despite the ups and downs, the local economy definitely rounded 2019 on a much better plane than earlier thought possible had the dire impact of the budget replay carried on throughout the year.

Local output growth, measured in gross domestic product (GDP), bounced back in the second half of the year as government effort at catching up on spending bore fruit during the period.

Inflation, or the sustained increase in prices of goods and services, was successfully tamed and arrested at a manageable level. The policy easing bias adopted by the Bangko Sentral ng Pilipinas (BSP) also helped as this unleashed additional liquidity into the financial system and helped spur economic activity.

While a rebound in economic growth was seen in the quarter ending September 2019, the experts are divided on the subject of whether or not government will hit the low end of the revised growth target.

Earlier, the Cabinet-level Development Budget Coordination Committee (DBCC) projected a narrower growth print for 2019, and brought down the previous 6 to 7 percent target to only 6 to 6.5 percent.

National Economic and Development Authority (NEDA) Undersecretary Rosemarie Edillon said the tighter growth range was due to the lower-than-expected economic data in the first half of the year.

“For the year, we’re actually proposing a tighter band because we already have the first to third quarter numbers. If we say it’s 6 to 7 percent, then it’s no longer credible,” Edillon said.

GDP, which stood at 6.2 percent in the third quarter than the 5.5 percent a quarter earlier, was expected to sustain the momentum and surge further, enabling the economy to grow by 6 percent for the full year.

Socioeconomic Planning Secretary Ernesto Pernia said the economy needs to grow by at least 6.7 percent in the fourth quarter in order to reach the target. While he acknowledged such may be considered a tall order, the NEDA chief bared confidence that such is within reach.

“(It is) very achievable. We have seen the economy surge and this will continue. A surge by 5 percentage points should be easy,” Pernia said.

The country’s inflation rate has also been kept at a manageable level and seen to remain so over the medium-term.

“The average inflation rate for 2019 is projected to settle at 2.4 percent, indicating relatively stable prices for Filipino consumers, while the assumed average rates for 2020 to 2022 will remain between 2 to 4 percent throughout,” the DBCC said in a statement.

“In addition, the assumption for the US dollar price of Dubai crude oil per barrel has been adjusted downwards in the medium-term. For 2019, the projected range has been narrowed to the range of $63 to $64. From 2020 to 2022, the price range is now projected to average between $55 to $70 per barrel,” it added.

Inflation, which peaked at 6.7 percent in October last year was successfully tamed, the latest print averaging only 1.3 percent in November this year.

For December, the BSP Department of Economic Research (DER) forecast inflation ranging from 1.8 to 2.6 percent as the impact of so-called base effects dissipates.

According to BSP-DER, upward pressure from electricity rates, gasoline prices and the impact of weather-related disturbances on selected food items could be tempered by the sustained cuts in domestic rice prices.

Previously, BSP Deputy Governor Francisco Dakila Jr. said low inflation will help boost consumption coinciding with holiday spending in December.

Domestic liquidity, muzzled only high interest rates and high deposit reserve requirement (RR) imposed on lenders in the early part of the year, was reversed following the series of cuts executed by the central bank.

On the key policy rates, the BSP unwinded a total 75 basis points that brought the rate lower from 4.75 percent to only 4 percent.

The BSP similarly bared the intention to dial back the 175 basis point policy hike imposed in 2018 given the sustained improvement in inflation and other economic data.

As a result, the central bank is seen to resume cutting the monetary policy in 2020 in line with BSP Governor Benjamin Diokno’s forward guidance of a minimum 50 basis point reduction in key interest rates.

“For policy cuts, at least 50 basis points. We’re observing what the other central banks are doing. As of now, they are still on an unwinding mode.

On the banks’ deposit reserves, which stood at 18 percent at the onset of 2019, the BSP has reduced it a total 400 basis points and rounded the year with the deposit reserve at only 14 percent.

Despite the reduction, Diokno indicated further RR cuts as he bared the plan to bring it to single digit by the end of his term in 2023.