Philippines must prepare for future shocks – Diokno

MANILA, Philippines — The Philippines need to harness significant lessons from the pandemic to prepare for future shocks, according to BSP Governor Benjamin Diokno.

“Indeed, deep into the pandemic and even during the strictest part of the lockdown, we have exhibited fortitude and resilience as individuals and as a nation. But resilience is not enough. We must collect and harness significant lessons from this experience, so when we find ourselves in a similar situation in the future, we will be more prepared and know exactly what to do,” Diokno told members of the Tuesday Club.

Diokno said the economy is seen bouncing back this year with a gross domestic product (GDP) growth of 6.5 to 7.5 percent after slipping into recession last year.

“Hard macro and micro economic data suggest that the worst is behind us. With the further easing of restrictions, improvements in the healthcare system, and the full cooperation from each one of us to do what it takes to keep viral transmission under control, this growth target is easily attainable,” Diokno said.

Economic managers through the Development Budget Coordination Committee (DBCC) are expecting a deeper GDP contraction of 8.5 to 9.5 percent instead of 4.4 to 6.6 percent for 2020. The Philippine economy last contracted by 0.5 percent in 1998 due to the Asian financial crisis.

Diokno said the country’s unemployment rate is seen improving to seven percent this year from a record 17.6 percent in April.

The BSP chief said the Philippines was in a position of strength with manageable inflation, prudent fiscal position, strong and resilient banking system, and hefty level of gross international reserves (GIR) when the COVID-19 pandemic hit.

“2020 was an extraordinary year because of the COVID-19 pandemic which, by the way, is more than a health crisis, as the country also felt its debilitating impact on lives, livelihoods, and inequality. But this once-in-a-lifetime crisis, it is unlike other crises we have faced in the past,” Diokno said.

The BSP has been doing the heavy lifting to calm the market and keep the economy afloat, unleashing close to P2 trillion into the financial system equivalent to 10 percent of GDP to cushion the impact of the pandemic on the economy.

“Finally, as with any other significant disruption in our history, it is my fervent hope that this crisis will usher in a new economy—one that is more robust, more inclusive, more technologically-savvy. As soon as this pandemic fades, I expect that the Philippines to become nothing less than an economic champion,” Diokno said.