The Philippine economy is far from collapsing despite the onslaught of COVID-19. The restrictive lockdown measures may have taken away millions of Filipino jobs and shut down many establishments, but they have not made a dent on the economy so far.
Economic activities admittedly have considerably slowed down in some sectors, especially in tourism, retail and personal services. The poverty level obviously has worsened because of the number of jobless persons, and yet the overall economy is functioning and nowhere near a crisis level.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno early this week assured financial services group and global investment bank Nomura of Japan that the macro-economic fundamentals of the Philippines had remained intact and that this Southeast Asian nation was poised for a strong economic recovery in the post-COVID-19 era.
Macro-economic fundamentals are a summary of the country’s economic health. They serve as guide to investors, creditor banks and traders doing business in the Philippines. A runaway inflation and volatile exchange rate, for instance, will discourage investors and watchers of the Philippine economy because it will impact on production cost and borrowing rate and, ultimately, on one’s return on revenue.
The gross international reserves of the Philippines stood at $108.05 billion at the end of August, or higher than the foreign debt of $97 billion as of end March. The healthy level of international reserves stabilizes the exchange rate and shields the Philippine economy from a potential foreign exchange crisis.
Solid macro-economic fundamentals such as higher international reserves, flexible exchange rate, low inflation and interest rates, and a stable banking system provide a conducive business environment that, in turn, create jobs and attract both local and foreign investments.
The same solid macro-economic fundamentals will ensure recovery in the long-term period and the post-COVID era, and help keep the economic effects of the pandemic temporary. The economy bounced back with an 11.8-percent expansion in the second quarter and will likely overcome bumps in the road.