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Bangko Sentral ng Pilipinas: Monetary Decisions

Joven Karl G. Malasig

Meycauayan College

Ma. Rica Hermoso

December 16, 2022

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Monetary Policy

Monetary policy is a set of tools used by a nation's central bank to control the overall

money supply and promote economic growth and employ strategies such as revising interest

rates and changing bank reserve requirements.

Monetary Policy Decisions

The Monetary Board decided to raise the interest rate on the BSP's overnight reverse

repurchase facility by 75 basis points to 5.0 percent, effective 18 November 2022.

Price Stability

The BSP's main responsibility is to formulate and implement policy in the areas of

money, banking and credit with the primary objective of preserving price stability. Price stability

refers to a condition of low and stable inflation. By keeping price stable, the BSP helps ensure

strong and sustainable economic growth and better living standards.

First Quarter

The Gross Domestic Product (GDP) expanded by 8.3% in the first quarter of 2022,

according to the Philippine Statistics Authority (PSA). The recorded GDP rate is well within the

government's full year growth target of 7 to 9 percent. The real GDP (at constant 2018 prices)

has already exceeded the pre-pandemic GDP level of P4.46 trillion in the same period in 2019.

Filipino net income grew by 103.2% in the first quarter of 2022 from a decline of 75.9%

during the same period in 2021. Gross National Income (GNI) recovered and grew by 10.7%.

Net Primary Income (NPI) is comprised mainly of remittances from overseas Filipinos.
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Among the major ASEAN member states with published GDP figures for the first quarter

of 2022, the Philippines (PH) recorded the highest growth, followed by Vietnam (VN) with

5.03%, Indonesia (ID) with 5.01%, and Singapore (SG) with 3.4%

Abaca and poultry & egg production registered the highest growth rates of 13.6% and

12.3%. Major crops such as palay and corn both contracted by 1.8% and 0.7% in the first quarter

of 2022. Agriculture, forestry and fishing (AFF) rose by 0.2%.

Industry (IND) posted the highest expansion among production sectors at 10.4% in the

first quarter of 2022. Three out of four sub-sectors registered double-digit growth with mining

and quarrying at the fore at 17%, followed by construction and manufacturing.

All eleven sub-sectors grew in the reference period, with three of them posting double-

digit rates. Services (SERV) rebounded by 8.6% in the first quarter of 2022 from a 4%

contraction in the same period in 2021. These are the same services sub-sections which suffered

the biggest slumps in the 1st quarter of 2021. All eleven sub-sectors grew in the reference period,

with three of them—i.e., transportation and storage (26.5%), other services (22.3%), and

accommodation and food service activities (21%) posting double-digit rates.

Second Quarter

The Philippine Statistics Authority (PSA) reported 7.4% growth in the Gross Domestic

Product (GDP) for the second quarter of 2022. This is the fifth consecutive period of recorded

GDP growth. However, quarter-on-quarter comparison reveals a slight decline of 0.1%.

GDP in the first half of 2022 is now valued at P9.6 trillion (at constant 2018 prices), higher than

its pre-pandemic 2019 first semester value of P9.49 trillion.

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Filipino net primary income (NPI) bounced back by 64.8% in the second quarter of 2022,

according to official figures. Gross national income (GNI) rose to 9.3% from 6.8%. NPI is

comprised mainly of remittances from overseas Filipinos.

The agriculture, forestry and fishing (AFF) sector rose by 0.2% in the second quarter of

2022. Major crops such as palay and corn, both sustained growth of 0.7% and 10.2%. Sugarcane

which includes muscovado sugar-making in the farm, posted a double-digit decline of 50.1%.

The industry (IND) sector grew at a slower pace of 6.3% in the second quarter of 2022

compared to the double-digit expansion of 21.3%. Three out of four sub-sectors registered

growth with construction at the fore with 19%, followed by electricity, steam, water and waste

management with 5.4%; and manufacturing with 2.1%.

SERV Services (SERV) sustained its growth at 9.1% in the second quarter of 2022, with

arts, entertainment and recreation expanding by 39.5%. All eleven sub-sectors expanded, with

other services like accommodation and food posting double-digit growth. All eleven sub-sectors

expanded, with other services like arts, entertainment and recreation (39.5%), accommodation

and food (29.9%), transportation and storage (27.1%), and information and communication

(10.7%) posting double-digit growth.