The Philippine economy will surely be better in a year’s time due to the combined effects of a low base and accelerating business activity in the current and succeeding quarters, according to the head of the central bank, assuring the public the the recovery was well under way.
In a statement, Bangko Sentral ng Pilipinas Gov. Benjamin Diokno expressed disbelief at last week’s Social Weather Station (SWS) survey results that showed 40 percent of Filipinos having a more pessimistic view of local economic prospects over the next 12 months.
“We’re in better shape now than we were three months ago,” he told reporters in a mobile phone message at the weekend. “Based on available information, I truly believe that the worst is behind us.” “Repeat: the SWS survey is based on perception by a limited number of adults with limited information,” Diokno added, explaining that the poll results were based on expectations of 2,000 adults.
The survey released by SWS last week also found out that this 40-percent economic pessimism rate among adult Filipinos—or the belief that the economy would take on a worse turn—was the highest since a 52-percent rate recorded in June 2008.
In 2008, the Philippines under former President Gloria Macapagal Arroyo was affected—albeit not gravely—by the global financial crisis.
Meanwhile, 24 percent of the respondents believed that the country’s economic status would remain the same, while 30 percent expect it to improve. However, this 30-percent economic optimism, or belief that the economy would be better, was at its lowest since the 27 percent recorded last March 2015.
“I cannot imagine how the economy will be worse off 12 months from now, coming from a record-breaking contraction in the second quarter of 2020, owing to the total lockdown in March, April and May,” he said.
With gross domestic product having contracted by 16.5 percent in the second quarter —the sharpest dive on record —the central bank expects the third and fourth quarters to register shallower declines owing the the gradual easing of restrictions imposed to slow the spread of the coronavirus pandemic.
Government economic managers expect that growth will resume its gradual uptrend next year.
“In the third quarter, the government has opened the economy gradually, let part of business activity to resume and allowed more transport to operate,” Diokno said. “I expect that the economy will be more open in the fourth quarter than in the third quarter, more open in the first quarter of 2021 than in the fourth quarter of 2020, and so on. So it boggles my mind how the economy will be worse 12 months from now,” he added. “The virus infection rate has started to flatten, ‘R0’ (the average number of people infected by one infectious individual) is now below 1, and the government has shifted from general lockdown to granular or localized lockdown.”
“Let me assure everyone that based on immediate past, ‘nowcast’ and forecast data, the Philippines is now on its way to recovery,” the central bank chief said. “Hence, the economy would be in a better—not worse—shape 12 months from now.” INQ