BSP: rapid and wider vaccination to avoid deeper economic scars

Lawrence Agcaoili (The Philippine Star) – July 24, 2021 – 12:00 am

MANILA, Philippines – Rapid and widespread access to vaccines is crucial to preventing deeper economic scars, boosting demand and building confidence amid the emergence of COVID-19 variants in the country, said Benjamin Diokno , Governor of Bangko Sentral ng Pilipinas (BSP).

He said the successful deployment of COVID-19 vaccines is of paramount importance for the recovery of the Philippine economy.

“As the government’s immunization program continues to gain momentum, we can expect corporate and household sentiment to improve, leading to a rebound in spending, employment and consumption. “said Diokno.

“Going forward, the overall stance of monetary policy will remain geared towards preserving the ongoing political support to fuel the momentum for economic recovery.”

The BSP chief said the conduct of monetary policy would remain data-driven and monetary authorities would remain vigilant to emerging risks that may arise from domestic and global developments.

Economic officials see the economy rebounding with gross domestic product (GDP) growth of six to seven percent this year after the country entered recession with a record 9.6 percent contraction last year.

The pandemic-induced recession spanned five quarters, with GDP declining 4.2% in the first quarter due in part to the government’s calibrated approach to mitigating transmission of the virus.

“Higher frequency indicators of domestic demand also suggest a recovery in economic activity with the gradual easing of foreclosure restrictions. However, downside risks to the growth outlook persist as the emergence of more transmissible COVID-19 variants continue to dampen market sentiment and threaten to delay the full reopening of the economy, ”Diokno said.

According to Diokno, the BSP must maintain monetary policy support in order for the economic recovery to gain momentum.

“We believe that the current stance of monetary policy remains appropriate, especially as price pressures are expected to dissipate further with the continued implementation of non-monetary measures on the supply side by the government. . Maintaining an accommodative stance will also help to counteract banks’ risk aversion, which continues to dampen lending activity despite abundant liquidity in the financial system, ”he said.

BSP chief executive Zeno Ronald Abenoja said average inflation slowed to 4.3% in the second quarter from 4.5% in the first quarter as non-monetary interventions eased domestic supply constraints.

“Inflation is expected to stabilize near the high end of the government’s target in 2021, return to the midpoint of the target in 2022 and 2023. Risks to the inflation outlook remain broadly balanced,” he said declared Abenoja.

BSP … From B1

Abenoja added that there were encouraging signs of recovery amid indications of an improving business climate and less negative domestic growth.

“BSP affirms its support for the economy for as long as necessary to ensure its strong and sustainable recovery,” added Abenoja.

New York-based Fitch Ratings said persistent outbreaks in Southeast Asian countries, including the Philippines, Thailand and Vietnam, have reduced the prospects for recovery.

Fitch said rating tensions were already evident in the Philippines, which led to the BBB rating outlook being revised from stable to negative earlier in the month.

He said the Philippines had not been as badly affected as others in the region by the latest wave of infection, but its economic contraction in 2020 was particularly deep.

“We believe there will be downside risks to the medium-term growth outlook due to potential scar effects, as well as possible challenges in unraveling the exceptional policy response to the health crisis and restoring public finances healthy as the pandemic recedes “, says the observer.

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