Bangko Sentral Gov. Benjamin Diokno said the worst is over for the economy vis-à-vis the impact of the pandemic, however, the BSP remains committed to implementing measures to support recovery.
“The worst is over. But while we’re not out of the woods yet, we have to look beyond this crisis. What else can we do to make the Philippines more robust and resilient? How do we prepare for the next crisis?” he said in his speech during a virtual forum.
Growth, as measured by gross domestic product, contracted by 0.2 percent in the first quarter of this year and it is projected to register a deeper decline in the second quarter after Luzon, which accounts for about 70 percent of the country’s annual output, was placed under an enhanced community quarantine from March 17 to May 15, 2020.
This quarantine level was extended for Metro Manila until the end of May 2020 to counter the rise of coronavirus disease 2019 cases.
Economic managers have revised their growth forecast for the domestic economy this year from 6.5 percent to 7.5 percent to a two-percent to 3.4-percent contraction.
The economy is expected to recover next year, with the growth figures set between eight percent and nine percent.
The BSP chief reiterated the country entered the pandemic in a position of strength because of the reforms in the past years.
“The result of this process provided (a) steady anchor for the country’s economic resilience. Our economy has weathered different economic crises, political changes, and natural calamities,” he said.
He said the pandemic caused by Covid-19 “is a crisis like no other” because it “has morphed into a full-blown global economic crisis”.
“Yet, the Philippines has had strong economic fundamentals such as robust growth, good fiscal performance, and strong external and financial sector positions –which provided relative stability in the face of the Covid-19 pandemic,” he added.
To counter the effect of the pandemic, the central bank has implemented several measures that include the total of 175 basis points reduction in the BSP’s key rates; 200 basis points cut in universal and commercial banks reserve requirements; implemented relief measures for banks to support lending to micro, small, and medium enterprises; and slashed reserve requirements of thrift banks, rural banks and cooperative banks by 100 basis points.
Diokno said the country is well-situated to restart its economic growth and development process, adding “the decision to unwind Covid-19 policy response will be gradual, prudent, and evidence-based”.
“A well-thought-out disengagement strategy is necessary,” he said.
The BSP chief said the central bank remains committed to implementing additional policy measures and reforms “to help the Philippine economy recover from the Covid-19 crisis and to build its resilience against future crises”.