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Friday, March 29, 2024

6% economic expansion possible in 2021 – Diokno

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Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the gross domestic product may grow between 5 percent and 6 percent this year, based on the economic output in the last two quarters.

The growth would be a turnaround from the 9.6-percent contraction last year at the start of the pandemic, the worst economic performance since World War 2.

“The GDP prospects appear bright. With the adjusted second-quarter GDP real growth of 12 percent, followed by a 7.1-percent growth in the third quarter, a 2021 full-year growth rate of 5 to 6 percent is attainable,” Diokno said in a statement over the weekend.

Diokno said based on recent developments including the ramped-up vaccine rollout and the ebbing COVID-19 cases, the Development Budget Coordinating Committee’s GDP growth targets of 7 percent to 9 percent in 2022 and 6 percent to 7 percent in 2023 “look doable.”

“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.

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The economy expanded by 12 percent in the second quarter and 7.1 percent in the third quarter, bringing the average in the first three quarters to 4.9 percent.

Diokno also cited the easing inflation in October on stabilizing prices for meat and fish prices with the availability of imported supply.

He said with sufficient slack in the labor market and the expected higher participation rate as workers re-entered the work force, there was little likelihood of a wage hike as the vaccine rollout quickened and consumer confidence rose while economic activity expanded.

“This is in sharp contrast to the inflationary pressures in developed countries like the US, EU and UK owing to supply chain bottlenecks and the rising labor expenses,” he said.

“There appears to be no pressure on rising real estate prices: increase in real property prices in the National Capital Region are either flat or slightly down, though there is a slight increase in prices in few places outside NCR,” Diokno said.

He said the threat of peso depreciation was also fading as the local currency was expected to appreciate, with the prospect of stronger remittance inflows in the last few weeks of the year in time for the Christmas holidays.

The BSP predicted that inflation would average 4.3 percent in 2021, 3.3 percent in 2022 and 3.2 percent in 2023.

“This suggests that the BSP may continue to be patient and continue its accommodative monetary policy stance given the current domestic, external and financial developments,” Diokno said.

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