The Philippine economy is expected to grow by at least four percent this year and seven percent in 2022, according to the Bangko Sentral ng Pilipinas (BSP).


BSP’s gross domestic product (GDP) assumptions for 2021 and 2022 are the low end of the government forecast bands of 4-5 percent for this year and 7-9 percent in 2022. In the first six months of the year, GDP growth is at 3.7 percent.

BSP managing director Zeno Ronald R. Abenoja, also head of the Department of Economic Research, said the country’s macroeconomic fundamentals continue to be intact and sound but there are uncertainties in the growth path which are dependent on how fast the population can get inoculated against COVID-19.

But, Abenoja said the gradual economic recovery has already started with the GDP breaking five quarters of contraction in the June data. The GDP expanded by 11.8 percent in the second quarter 2021.

“We think the recovery (in the first half 2021) will be sustained in the sense that there will be positive numbers moving forward,” he said in a BSP online media lecture on Thursday, Oct. 7.

For the BSP, the average growth rate for GDP this year is at least four percent based on the target of the National Government. “With refinements in the lockdown protocols and the acceleration of the vaccination program, we think that these will be key factors in sustaining the recovery that we have observed starting late last year up to the second quarter of this year,” said Abenoja.

He said the overall momentum of economic recovery remains tentative however due to threats of new virus strains but reiterated that additional fiscal support and acceleration of vaccination program are critical in sustaining the recovery.

“The accommodation of monetary policy is there, we have infused liquidity but there’s some uncertainty in the growth path and that is mainly driven by concerns of the virus,” said Abenoja. The BSP has injected P2.3 trillion of extra liquidity in the financial system since the pandemic began, and this is equivalent to almost 13 percent of GDP.

He noted that the government has procured enough vaccines to inoculate the target population for the Philippines. “It is now on the pharmaceutical companies to be able to deliver the amount of vaccines that have been ordered. The government has procured vaccines from nine manufacturers and that’s important because it will help stabilize the amount of vaccines that will come in and support the acceleration of vaccination,” he added.

The BSP has kept the benchmark interest rate steady at two percent since November 2020 to support the recovery.

Abenoja said the BSP will continue to have an accommodative monetary policy stance which is necessary to sustain liquidity in the financial system and support the recovery of the economy.

Despite the high inflation due to transitory factors, he reiterated that inflation is projected to ease towards the midpoint of the two-four percent target in 2022 and 2023. The BSP forecasts an average 4.4 percent inflation for 2021 and 3.3 percent in 2022. It expects inflation to remain above the target for October before starting to decelerate below the target by November this year.

BSP Governor Benjamin E. Diokno said last month that GDP growth may return to pre-COVID levels by the first quarter of 2023.

Diokno has previously said that pre-pandemic GDP growth could begin to manifest by the fourth quarter of 2022, but the reimposition of stricter lockdowns last August pushed back the recovery period.

Before the global pandemic, the local economy has an annual growth average of between 6-7 percent. The GDP contracted by 9.57 percent in 2020 due to COVID-19. It was a still recession period in the first quarter this year with a GDP decline of 3.9 percent but in the second quarter, the economy expanded by 11.8 percent primarily because of base effects.

Source: Manila Bulletin (