Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Monday the gross domestic product may grow slower than expected this year on the prolonged impact of the coronavirus pandemic.
Diokno said during the Laging Handa briefing there was a possibility of a downward revision in the 2021 GDP growth forecast of 6.5 percent to 7.5 percent to around 6 percent to 7 percent.
He said the interagency Development Budget Coordinating Committee—composed of the heads of the Department of Finance, Department of Budget and Management and the National Economic and Development Authority—might consider the adverse effects of the latest rounds of community quarantines in Metro Manila and nearby provinces to the economy.
“The DBCC is currently reviewing the projection it made earlier. I think economic managers may lower it slightly to around 6 to 7 percent,” Diokno said.
Diokno expressed confidence the economy could bounce back to its pre-pandemic level by 2022. He said the economy was in a position of strength when the COVID-19 pandemic struck.
“The Philippine economy is not that bad,” Diokno said in reaction to some analysts’ observation that the country would be among the last to recover in the Asia- Pacific region because of deep scar caused by the health crisis.
Diokno said the pace of the economic recovery would depend on how fast the government would roll out the vaccination program to prevent the spread of the virus. He said the government should provide jobs and livelihood to the affected population.
He said the latest business expectations survey done by the BSP showed marked improvements in the business sentiment in the next 12 months on the expected rollout of vaccines and the resumption of business activity.
Diokno said the improvement in the business sentiment might be translated into additional hiring of employees by companies in different sectors.
He also assured that the banking system remained sound and stable to support the financial need of the economy. Inflation is also seen to remain manageable despite the elevated print of 4.5 percent in March 2021 which, Diokno said, was transitory.
The GDP contracted by a record 9.6 percent in 2020 amid the pandemic. The economy entered into a technical recession as early as the second quarter of 2020 when the GDP contracted by 16.9 percent.
The International Monetary Fund said the Philippines might grow 6.9 percent this year, taking into account the expected recovery of the global economy.
It also kept the growth forecast of 6.5 percent for the Philippines in 2022.
Overall, the ASEAN-5 economies are seen to grow by 4.9 percent this year, a turnaround from the 3.4-percent contraction in 2020.
IMF resident representative to the Philippines Yongzheng Yang said the Philippine economy ended 2020 with stronger-than-expected growth in the fourth quarter which provides a momentum for expansion this year.