The central bank looks certain to keep its benchmark overnight borrowing rate at 4.5 percent on Thursday, after the annual inflation rate slowed to a four-month low in August and second-quarter growth was weaker than expected.
“The fact that the inflation outlook continues to improve gives us that flexibility to be more attentive to the needs of economic growth,” Guinigundo said on the sidelines of a regional economic forum.
The economy grew 3.4 percent in the June quarter from a year earlier, well below government and market forecasts, due mainly to weak state spending and sluggish exports.
Guinigundo said the central bank can only do so much to help boost economic activity and the government must do its share.
“What is crucial at this point is for the absorptive capacity of the economy to expand, and one way of doing is for the public sector to take the lead,” Guinigundo said.
“Private investors will also be encouraged in the process if infrastructures are put in place, if the specific objects of investments are rolled out and prepared for quick execution,” he added.
Government spending in the seven months to July was 10 percent below year-ago levels. The government has vowed to accelerate spending in the second half to help support the economy.
The government has said it was still targeting growth of 7 to 8 percent this year. The economy would need to grow around 10 percent in the second half of the year to achieve that, according to the economic planning agency.
