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Philippines: BSP sees economy growing 6% this year
MANILA, Philippines — The Philippines may grow by more than six percent this year as the economy is on its way to full recovery from the impact of the pandemic by the third quarter of next year or earlier, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno.
Diokno said a full-year gross domestic product (GDP) growth of five to six percent may be exceeded this year after a 12 percent expansion in the second quarter and a stronger-than-expected growth of 7.1 percent in the third quarter.
“The GDP prospects appear bright,” Diokno said. Last August, the Development Budget Coordination Committee (DBCC) lowered this year’s GDP growth target to a range of four to five percent from the original forecast of six to seven percent due to the intermittent lockdowns with the emergence of the more contagious Delta variant.
The BSP chief said the country’s GDP economic growth targets of seven to nine percent in 2022, and six to seven percent in 2023, are doable amid the ebbing COVID cases and ramped up vaccine rollout.
“These latest forecasts suggest that the country’s real output will revert to its pre-pandemic level by the third quarter of 2022, if not sooner,” Diokno said.
After peaking at a daily average of more than 22,000 a few months ago, the daily tally of COVID infections has gone below 2,000. COVID cases in the Philippines have breached 2.8 million with more than 45,000 deaths.
In terms of vaccine rollout, close to 31 million Filipinos have been fully vaccinated and 36.91 million received their first dose. The government aims to achieve herd immunity by vaccinating 70 percent of its total adult population.
Diokno said the BSP is now expecting inflation to average 4.3 percent this year after easing to 4.6 percent in October from 4.8 percent in September, mainly driven by stabilizing prices of meat and fish due to the availability of imported supply.
Inflation averaged 4.5 percent from January to October as it continued to exceed the BSP’s two to four percent target since the start of the year.
The BSP chief said inflation may ease back to the target range, averaging 3.3 percent in 2022 and 3.2 percent in 2023.
With sufficient slack in the labor market and the expected higher participation rate as workers re-enter the work forces, Diokno said there is little likelihood of a wage hike as the vaccine rollout quickens and consumer confidence rises while economic activity expands.
According to Diokno, this is in sharp contrast to the inflationary pressures in developed countries like the US, European Union and United Kingdom due to supply chain bottlenecks and the rising labor expenses.
Diokno also said the threat of peso depreciation is fading as the local currency is expected to appreciate, with the prospect of stronger remittance inflows from overseas Filipino workers (OFWs) in the last few weeks of the year in time for the Christmas holidays.
The central bank has committed to do whatever it takes to maintain an accommodative monetary policy until the country fully recovers from the impact of the global health crisis.
Source: https://www.philstar.com/business/2021/11/16/2141507/bsp-sees-economy-growing-6-year