Bangko Sentral ng Pilipinas Governor Benjamin Diokno warned of potential headwinds on the road to recovery from the COVID-19 pandemic.
Diokno said in a presentation before the House committee on economic affairs that these headwinds might include slower growth in trade, longer-than-expected lockdowns, rising inequality, weak balance sheets and geopolitical tensions.
“Asia is heavily dependent on global supply chains and cannot grow while the whole world is suffering. Asia’s trade is expected to contract significantly due to weaker external demand…,” Diokno said.
He said total trade—exports plus imports—was projected to decline by about 20 percent this year in Japan, India and the Philippines.
Diokno said that when lockdown measures were fully relaxed, economic activity was not likely to return to full capacity because of changes in consumer behavior and measures put in place to maintain physical distancing and reduce contagion.
He noted the rising inequality in Asia. Citing a research, Diokno said past pandemics led to higher income inequality and hurt employment prospects of those with limited education.
He said weakened household and corporate balance sheets in many Asian countries could weigh negatively on investor sentiment and amplify the effect of increasing uncertainties associated with geopolitical tensions. Julito G. Rada
Diokno, however, assured that while the timing for the end of the pandemic remained uncertain, he said the BSP was committed to do “whatever is necessary” to help the Philippine economy recover from the devastating impact of the health crisis and to build its resilience against future crises.