The head of the country’s central bank said on Thursday (Aug. 6) that the worst is over for the Philippine economy, after the government announced that economic growth declined by at least 16.5 percent, the worst since 1985, due to the COVID-19 pandemic.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the government’s economic managers are assessing the performance of the economy after the country officially entered recession, or two consecutive quarters of contraction.
“I believe the worst is behind us,” Diokno said. “But we’re not out of the woods yet.”
The central bank chief attributed the 16.5 percent decline in economic growth to the comprehensive lockdown against COVID-19 during the quarter.
“As we gradually reopen the economy, economic activity has started to pick up,” he said.
“No doubt, given the sharp drop of the economy in the second quarter, I’m convinced that the third quarter will be better than the second, and that the fourth quarter will be much better than the third,” Diokno said.
The central bank has been one of the most proactive government agencies in responding to the pandemic, initiating policies that resulted in some P1.3 trillion in cash released into the local financial system since early this year.
Thanks to the prevailing low inflation regime, Diokno said policy makers are prepared to do more should the need arise for more liquidity to buttress the economy.
He added that the experience of dealing with the pandemic over the last few months has given Filipinos more information about what works and what doesn’t.
Because of this, public health and economic policy makers can be expected to mandate more appropriate responses going forward.
Diokno also said a large part of the country’s success in overcoming the current crisis will depend on “leadership, clear messaging, and human behavior.”
“Each individual has a role to play in winning the war against the virus,” he said. “The virus won’t go away soon, so we have to learn to live with it.”
The BSP chief also said that “comprehensive, nationwide” lockdowns are a thing of the past as a method of fighting the spread of the virus as “they exact a heavy damage to the economy, jobs, livelihoods and incomes.”
“Henceforth, the focus of national leaders should be on more localized village level or building level containment,” he said.
“Isolation facilities should be built in all major cities and large municipalities, in support of the government’s test, trace and treat strategy,” Diokno said.