Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the Philippines and the Southeast Asian region as a whole are poised to recover faster from the coronavirus disease 2019 (COVID-19) pandemic compared to the rest of the world.
Speaking at the Southeast Asia Development Symposion 2022 organized by the Asian Development Bank (ADB), Diokno said current conditions favor a robust recovery for the Philippines.
“We were growing at a rate of 6.4 percent annually for the last 10 years before the pandemic. And so we were able to cut poverty incidents from 23.5 percent in 2015, to 16.7 percent in 2018. So while the pandemic may have set us back for some of our goals, I’m confident really that we are on our way to regaining our pre pandemic growth projector,” he said.
Diokno noted that while the country is reeling from the pandemic it still manage to effect “structural reforms” like passing the retail trade liberalization Act, the Public Service Act, and the Foreign Investment Act, which will impact how foreign investors will bring money in the Philippines.
The Philippines continues to benefit from the resilient overseas Filipino remittance and dollar receipts from business process outsourcing which helped the economy tide the adverse impact of the COVID-19 pandemic on foreign reserves, noted Diokno.
‘Our overseas Filipino remittances are fairly resilient. Many, many analysts predict that it will decline by about double digit level because of the pandemic. It didn’t, it declined by only 0.7 percent. And that that is because there is an altruistic side to the overseas Filipino remittances, Filipinos abroad tend to send more money to their families here in the Philippines whenever there is a problem. They can sense problem they send more. So in fact, it has been increasing since then, we did not suffer much decrease, as I said, declined by only 0.7 percent. And we look forward to higher remittance this year,” he said.
Diokno said these factors will help the country pay over the debt it tapped in the mid of the pandemic for various adaptation measures that include purchase of vaccines.
“We expect the economy to grow much faster than the growth in our debt. We expect to grow at seven to 9 percent. And our debt will not grow that much, maybe 2 percent. On the foreign exchange side, we don’t have that much risk as before. In previous crises, whenever there is a crisis in the Philippines, we run out of foreign exchange to service our foreign debt. That’s no longer the case. Our gross international reserves is equivalent to 10 months-worth of imports… three months worth of imports is ample or enough,” he said.
Diokno’s pronouncement come on the heels of an ADB study that showed 4.7 million people in Southeast Asia were pushed into extreme poverty by the COVID-19 pandemic.
The ADB noted 9.3 million jobs disappeared as a result of the pandemic.
The region’s economic output in 2022 is expected to remain more than 10 percent below the baseline no-COVID scenario, the ADB said, noting that unskilled workers and those working in retail and the informal economy, as well as small businesses without a digital presence are those among most affected.
In the Philippines, James Villafuerte, ADB senior economist for Southeast Asia, said the country needs to address the issue of economic scarring given the large disruption in the labor market, highlighted by reallocation of jobs across sectors and the rise of informal jobs that has resulted to unemployment rate to stay above its long term trend.
“In 2020, in the Philippines’ unemployment doubled to over 10 percent from 5.1 percent in 2019. Presently, unemployment in the Philippines is around 6.6 percent. But it’s still higher than the long term trend. The policy priorities that are important to really ensure that we create jobs and avert this labor market disruption is to strengthen enterprise-led training, emphasize the importance of industry board and also industry-led apprenticeship,” he said. Ruelle Castro
