MANILA (Reuters) – The worst is over for the Philippine economy hit by a pandemic, and a ‘dramatic recovery’ is expected this year, the central bank chief said Tuesday, adding that the conventional cash position is sufficient for a recovery in growth.
“The worst are behind us. The recovery phase has begun, ”Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said at a Reuters Next conference, announcing ‘green shoes’ such as improvements in compensation and foreign direct investments.
Speaking ahead of the release of 2020 GDP data on 28 January, Diokno said he also expected ‘firm’ growth in the fourth December and ‘double-digit’ growth in the second quarter of this year.
He said that “current policy is enough to move us forward” after the economy experienced its first recession in almost three decades in 2020.
Growth is expected to be between 6.5% -7.5% this year, following last year’s projected shortening of 8.5% -9.5%, he said.
The BSP delivered five cuts in interest rates by 200 basis points last year, with the overnight repurchase criterion rate at a low of 2%, making it among the most aggressive in the world. world in terms of policy mitigation.
It also cut the reserve requirement of banks by 200 basis points and provided additional liquidity support by purchasing government securities and extending loans to government.
In total, the central bank has injected about 2 trillion pesos ($ 41.6 billion) into the financial system, equivalent to 10% of the country’s GDP.
Diokno said that inflation, which averaged 2.6% in 2020, will remain within the 2% -4% target range this year and in 2022, giving the BSP room to support growth, if that is necessary.
The central bank is expected to review its monetary policy on February 11.
Additional recitation by Neil Jerome Morales and Enrico Dela Cruz; Edited by Shri Navaratnam