THE ECONOMY will not deteriorate further in the next 12 months as businesses are gradually resuming and with the virus better managed, Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said on Friday.
“Let me assure everyone that based on immediate past, nowcast, and forecast data, the Philippines is now on its way to recovery. Hence, the economy would be in a better — not worse — shape 12 months from now,” Mr. Diokno told reporters in a Viber message on Friday.
The central bank chief’s statement came after a survey released by the Social Weather Stations (SWS) on Wednesday showed adult Filipinos had a 40% economic pessimism rate. This was the highest since the 52% logged back in June 2008.
More Filipino adults expect worse economic conditions in the next 12 months than those who expect it to stay the same (24%) and those who are optimistic that the economy will improve (30%), the SWS survey conducted among 1,555 adult Filipinos across the country showed.
Mr. Diokno said the survey only reflects the perception of a “limited number of adults with limited information.”
“I expect that the economy will be more open in Q4 than in Q3, more open in Q1 2021 than in Q42020, and so on. So it boggles my mind how the economy will be worse 12 months from now,” Mr. Diokno said.
After the country’s gross domestic product’s (GDP) record 16.5% contraction in the second quarter, which plunged it into recession, Mr. Diokno said he “cannot imagine how the economy will be worse off” as lockdown measures have already been eased since then.
Mr. Diokno added the virus is now better contained and lockdowns have been more localized and granular, allowing more businesses to reopen.
The government expects gross domestic product to shrink by 4.5% to 6.6% this year amid the ongoing crisis. By 2021, the economy is seen bouncing back with a 6.5% to 7.5% growth.
The economy may continue to contract until the first quarter of 2021 due to the crisis, but the decline will be less steep, said ING Bank NV-Manila Senior Economist Nicholas Antonio T. Mapa.
“Although we may not see gross domestic GDP to contract by 16.5% anymore, negative GDP and the challenging job market may still be enough reason to be pessimistic over the next few months,” Mr. Mapa said in an email.
“We may have seen the worst of the downturn but it will be a while before we get back to where we were prior to COVID-19,” he added.
With this, Mr. Mapa said the government should redouble efforts to boost economic activities to complement the sizeable moves done by the central bank so far. — L.W.T. Noble