Bangko Sentral ng Pilipinas Governor and incoming Finance Secretary Benjamin Diokno expressed confidence there will be no more recession in the country as the economy is poised to sustain its recovery from the impact of the COVID-19 pandemic that triggered a 9.6-percent gross domestic product contraction in 2020.
Diokno said in an interview on BBC Asia Business Report the Philippines continued to post strong macroeconomic fundamentals despite the pandemic and the war between Russia and Ukraine.
“I can say with confidence that there will be no recession in the Philippines,” Diokno said when asked about warnings of a recession in the United States and its potential spillover to the rest of the world.
“We had been growing at around 6 to 7percent before the pandemic. The economy has recovered after a slowdown and contraction in 2020. It bounced back to 5.7 percent last year. During the first quarter of this year, it grew by 8.3 percent, and there is a strong probability that we will hit 7 to 9 percent this year, as originally projected before the pandemic,” he said.
Diokno cited the country’s hefty gross international reserves that could service import requirements for almost 10 months, the steady inflow of overseas Filipino remittances and business process outsourcing receipts and the rise in foreign direct investments.
He said to keep the economy on track, the BSP would continue to focus on its mandate of promoting price and financial stability. He said the 2022 general elections resulted in the election of a majority president and vice president from the same ticket.
The BSP is supporting whole-of-nation efforts and game-changing reforms to further bolster the country’s ability to recover from the pandemic, he said.
These significant reforms include the recently passed economic liberalization laws that will help open the country to more FDIs, thereby spurring job creation and fostering economic growth, he said.
These laws are the amended Retail Trade Liberalization Act that will lower the minimum paid-up capital for foreign corporations from $25 million to $500,000; the amended Foreign Investments Act that will allow foreign nationals to own a micro, small, and medium enterprise with a minimum paid-in capital of $100,000 subject to conditions; and the amended Public Service Act that will allow up to 100-percent foreign ownership of public services, such as telecommunications, railways, expressways, airports and shipping industries.
Domestic and external headwinds prompted the inter-agency Development Budget Coordination Committee to slightly reduce the gross domestic product growth estimate this year to 7 to 8 percent from the previous assumption of 7 to 9 percent, taking into account the continuing external risks, particularly the war in Eastern Europe and monetary policy normalization in the United States.
The DBCC is composed of the heads of the National Economic and Development Authority, Department of Budget and Management and Department of Finance.