Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the country’s gross domestic product (GDP) growth may return to pre-COVID levels by the first quarter of 2023, depending on the speed and efficiency of government’s vaccine deployment to free up more sectors of the economy.
During his weekly press chat on Thursday, Diokno said a post-COVID economy will not be the same.
“The way we see it, based on the data that we have … we will be back (to pre-pandemic levels) maybe by the fourth quarter of next year or the first quarter of 2023 on the aggregate level,” he said, adding that this recovery “does not mean it will be the same economy.”
“The structure, the composition of that economy, will be much, much different from the pre-COVID economy,” Diokno added.
Diokno has previously said that pre-pandemic GDP growth could begin to manifest by the fourth quarter of 2022, but the reimposition of stricter lockdowns last August up to this month has pushed back the recovery period. Before the global pandemic, the local economy has an annual growth average of between 6-7 percent. The GDP contracted by 9.57 percent in 2020 due to COVID-19. It was a still recession period in the first quarter this year with a GDP decline of 3.9 percent but in the second quarter, the economy expanded by 11.8 percent primarily because of base effects.
Diokno reiterated on Thursday that the BSP, if evolving outlook for inflation and growth allows, will “strive to maintain an accommodative monetary policy stance to help boost domestic demand and support market confidence, thus allowing the momentum of economic recovery to gain more traction in the coming months.”
“The BSP will continue to ensure that the expansion of money and credit, along with fiscal stimulus and low interest rates, will not lead to excessive inflation and trigger financial stability risks,” he said.
The BSP has always said that it has the ample monetary policy space to remain accommodative or expansionary in terms of policy stance in order to stimulate private consumption and investment.
The BSP has injected P2.3 trillion of extra liquidity in the financial system since the pandemic began. There are other policy support to ensure the economy will not be overly damaged due to the lockdowns.
Diokno earlier called for “cautious optimism” after the government downgraded its 6-7 percent GDP forecast this year to 4-5 percent, taking in the impact of the current Delta variant lockdown.
The BSP’s accommodative monetary policy has proved helpful with a positive GDP in the second quarter this year after four consecutive quarters of decline. The policy rate has been kept low at two percent since November 2020.