Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno is more confident of achieving an economic recovery back to the 6.5-7.5 percent level by 2022 as the country improves in responding to the public health crisis.
“Based on available information, we expect the economy to bounce back by 6.5 to 7.5 percent next year. With the further easing of restrictions, improvements in the healthcare system, and the full cooperation from each one of us to do what it takes to keep viral transmission under control, this growth target is easily attainable,” he said in a Tuesday Club press event.
For the first three quarters of 2020, the local economy contracted by 10 percent because of the pandemic. Back in November last year, as movement and economic restrictions are gradually lifted, Diokno said the BSP was still projecting a bounce back to 6.5-7.5 percent GDP growth as early as 2021 and then on to 2022. Later, he said a pre-pandemic GDP growth track will be more likely after 2021.
Diokno said Tuesday that with the expanding economic activity, the unemployment rate is expected to decline from a record-high 17.6 percent in April last year which was the the height of the COVID-19 lockdown, to seven percent in 2021.
“Indeed, deep into the pandemic and even during the strictest part of the lockdown, we have exhibited fortitude and resilience as individuals and as a nation. But resilience is not enough. We must collect and harness significant lessons from this experience, so when we find ourselves in a similar situation in the future, we will be more prepared and know exactly what to do,” said Diokno.
The BSP chief reiterated that the Philippines was – fortunately — in a position of strength when the country went into lockdown in March last year, with a manageable inflation environment that has continued for the rest of 2020.
The latest inflation number was a peak of 3.5 percent in December, but still within the BSP’s forecast range of 2.9-3.7 percent for the month.
This brought the inflation rate in 2020 to 2.6 percent, also within the government’s target range of two-four percent. The end-2020 inflation is likewise on point to the BSP’s full-year forecast of 2.6 percent.
This year, as of the latest Monetary Board assessment, the inflation forecast is 3.2 percent.
“The BSP continues to expect inflation to settle within the target range over the policy horizon,” said the BSP. “The recent uptrend in inflation is seen to be largely transitory reflecting the short term impact of weather disturbances.”
The BSP also said that future inflation’s balance of risks “continues to lean toward the downside owing mainly to the continued uncertainty caused by the pandemic on domestic and global economic activity.”
“Nevertheless upside risks emanate from the possibility of an early roll out of COVID-19 vaccines in the Philippines, which is expected to ease the existing lockdown measures and expand further operating capacity of the economy. At the same time, a stronger than expected world economic recovery as the vaccine is increasingly deployed in key economies abroad could present upward price pressures on global oil and food prices,” said the BSP.