The country’s latest economic downturn is “partly by design and driven by necessity,” Bangko Sentral Pilipinas (BSP) Govenor Benjamin Diokno said Monday.
Diokno explained that the government wanted to prioritize saving lives when it enforced quarantine restrictions since March to curb the outbreak of the new coronavirus disease. The local economy contracted by 0.2 percent in the first quarter of 2020 and is expected to further shrink in the second quarter amid the impact of the coronavirus lockdown.
“Without doubt, the downturn in the second quarter of 2020 will be deeper as the extension of the lockdown further dampens domestic demand and lowers production activities. The downturn is partly by design and driven by necessity,” Diokno said during a televised Palace press briefing.
“We wanted to prevent the virus from spreading too fast and thereby overwhelming our healthcare system and so we have to implement containment and mobility restrictions measures to flatten the curve; in other words we prioritized saving lives,” he added.
With the strict lockdown gradually relaxed by the government, Diokno pressed for the further opening up of the economy while observing health protocols.
He admitted though that many consumers would likely hold back on consumption until the world finds a vaccine or a successful treatment to the coronavirus.
“With household consumption and balanced set of firms adversely affected, alongside greater precautionary behavior amid continued uncertainty and fear of contagion, this will further dent consumption and investment and ultimately economic growth,” he said.
“However, we need to carefully balance the objective of restarting the economy as soon as possible, while at the same time ensuring that minimum health standards remain in place to prevent subsequent waves of infection from occurring,” he added.
To address weaknesses of consumer demand and mitigate further economic contraction, Diokno said there must be substantial targeted economic policies with fiscal policy at the frontline and the monetary policy playing a supporting role.
He said the BSP would stay data-driven in crafting monetary policy while considering tools and policy measures to combat the crisis. “The BSP is prepared to use the full range of its monetary instruments and to deploy monetary policy and regulatory relief measures as needed to save lives, jobs and livelihood, consistent with its price and financial stability goals,” he said.
Except for Cebu City that is under enhanced community quarantine (ECQ), the country is either under the more relaxed general community quarantine (GCQ) or modified community quarantine (MGCQ).
The government moved to ease the quarantine restrictions to jumpstart the economy and resume livelihood for the people. The Palace earlier said economic managers have publicly declared the country cannot afford another lockdown that weakened the economy, shut down many shops and displaced millions of workers.