Bangko Sentral ng Pilipinas Governor Benjamin Diokno said he now sees “concrete” signs of economic recovery from the global COVID-19 pandemic, driven by the acceleration of the vaccination program which is boosting economic activity and employment. Diokno, in a presentation Wednesday at the BSP-Philippine Institute for Development Studies virtual research forum, said growth had gained ground with an 11.8% increase in gross domestic product in the second quarter of 2021, after five quarters of pandemic-induced contractions that began in the first quarter of 2020. “A year and a half after the start of the COVID-19 pandemic, we are seeing concrete signs of an economic rebound,” Diokno said. “Accelerated immunization deployments, granular blockades and continued implementation of health security protocols have allowed the Philippine economy to gradually reopen and workers to return to their jobs,” he said. He said PASB was sticking to the revised forecast of the Inter-Agency Development Budget Coordination Committee of 4-5% growth this year and 7% -9% in 2022. The economy contracted by 9.6%. % in 2020 due to the pandemic, the worst economic performance since World War II. The BSP acted quickly in 2020 to support the economy during the pandemic. It cut its key rate by 200 basis points in total to help lower the cost of borrowing and boost market confidence. At the same time, he lowered reserve requirements by 200 basis points to increase the volume of loanable funds. In addition, it enabled banks to account for new loans to micro, small and medium enterprises and to large enterprises as an alternative to respecting reserve requirements.
BSP has also adopted extraordinary liquidity measures. These include purchases of government securities on the secondary market and provisional advances to the national government. “In total, the BSP has injected around 2.23 trillion pesos in cash, equivalent to 12.5% of the country’s GDP for 2020,” Diokno said. PASB has implemented regulatory and operational relief measures to maintain the stability of the financial system and ensure smooth access to financial services. It issued time-bound and targeted regulatory and operational relief measures to encourage BSP-supervised financial institutions to continue supporting the economy, with particular emphasis on the MSME sector. Previously, multilateral agencies had said accelerating the immunization program would be a key factor for the economy to quickly recover from the impact of the pandemic. The International Monetary Fund said continued political support, vaccine deployment and global growth will support a stronger economic recovery in 2022. Thomas Helbling, IMF chief of mission for Indonesia and the Philippines, said progress immunization program and support for monetary and fiscal policies would be at the heart of short-term economic recovery. A stronger global economy will be another crucial part of economic recovery.
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