Digitalization to boost Philippines GDP
MANILA, Philippines — Digitalization is set to boost the country’s domestic output as financial technology (fintech) innovations continue to promote inclusive growth, according to the Bangko Sentral ng Pilipinas (BSP).
In his speech during the 39th National Conference of Employers, BSP Governor Nestor Espenilla Jr. said the country’s gross domestic product (GDP) growth may expand by more than 14 percent once the financial inclusion gap is closed.
“Fintech innovations can also help drive financial inclusion as access and usage of financial services continue to be limited,” Espenilla said.
Based on World Bank estimates, only 31.3 percent of the Philippine adult population have bank accounts.
“An important part of this solution is digital enablement,” he said.
The World Bank, the BSP chief said, believes digital applications and related regulatory initiatives are expected to boost GDP by about three percent.
Furthermore, he said this may yield an increase of about 11 percent in the income of the population segment earning less than $2 per day.
Espenilla said the government recognizes the huge potential of fintech services to lower remittance costs to two percent from the average 7.1 percent for the country’s over 10 million migrant workers.
“Transaction costs for remitting $200 currently average at 7.1 percent of transaction amount globally. This can drop to as low as two percent,” he said.
Aside from lower remittance charges, the BSP said the government is facilitating other online-based banking and financial management services for Filipinos abroad.
The widespread use of mobile phones could provide for a broader reach of these financial services Espenilla said.
Additionally, he said the rapid development of peer-to-peer (P2P) lending could complement the role performed by traditional finance.
“Provided such lending platforms are properly managed and regulated, this could lead to a more resilient network and positively contribute to the diversification of risk across the financial system,” Espenilla said.
He said the BSP remains committed to fostering an enabling macroeconomic environment amid the country’s digital transformation journey.