Diokno: Recovery prospects promising | Philstar.com

Lawrence Agcaoili – The Philippine Star

November 28, 2021 | 12:00am


MANILA, Philippines — The medium and long-term prospects for the Philippines are promising despite the bumpy road to full recovery from the pandemic-induced recession, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said.

Diokno told participants of the Philippine Economic Briefing organized by various foreign chambers that the country’s macroeconomic prospects remain favorable.

The Philippines posted a back-to-back gross domestic product (GDP) growth of 12 percent in the second quarter and 7.1 percent in the third quarter.

The country slipped into recession with a record GDP contraction of 9.6 percent last year as the economy stalled due to mobility restrictions imposed by the government to slow the spread of COVID-19.

Diokno said economic growth averaged 4.9 percent from January to September, close to the upper end of the four to five percent target set by the Development Budget Coordination Committee (DBCC).

“Our third-quarter growth rate of 7.1 percent was among the highest in the ASEAN region,” he said.

The country’s economic expansion in the third quarter was faster than the 3.5 percent GDP growth of Indonesia, while the economies of Vietnam contracted by 6.2 percent, Malaysia by 4.5 percent, and Thailand by 0.3 percent.

Likewise, the GDP growth of the Philippines from January to September was faster than Indonesia’s 3.3 percent, Malaysia’s three percent, Vietnam’s 1.4 percent and Thailand’s 1.3 percent.

Diokno said the country’s nascent economic recovery is being supported by positive developments on the monetary, external and banking fronts.

After averaging 4.5 percent from January to October and exceeding the BSP’s two to four percent target since the start of the year, the BSP is confident that inflation would ease back to the target range starting this month and to the mid-point of the target in 2022 and 2023.

“The BSP will continue to closely monitor all risks to future inflation. We will remain vigilant against the emergence of second round effects and any possible unhinging of inflation expectations,” Diokno said.

He said monetary policy plays a crucial role in mitigating the negative impact of uncertainty and shocks caused by the pandemic.

“Over the past year or so, the BSP decisively pursued an accommodative monetary policy stance to ease financial market stress and provide support to domestic demand,” Diokno said.

Diokno said the process of gradual normalization of the BSP’s extraordinary pandemic-era measures and monetary policy settings would be outcome-based rather than anchored on a particular date.

Monetary authorities remain committed to supporting a sustainable economic recovery, while being guided primarily by the outturns in economic data such as inflation, real sector activity, and liquidity and credit conditions.

At the same time, the BSP remains vigilant against any potential second-round effects from ongoing supply shocks, particularly as the economy continues to recover and restrictions gradually ease, and remains ready to respond to threats to the inflation outlook as necessary.

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