Diokno on signs of PH recovery: ‘The worst is behind us’

MANILA, Philippines—The recovery of the Philippine economy from its worst postwar contraction in 2020 is starting to gain traction as shown by the strength of the latest key indicators, the head of the Philippine central bank told foreign businessmen and diplomats recently.

Speaking before the Joint Foreign Chambers, a highly-respected group of foreign diplomats and business leaders, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said economic managers “have started to see green shoots as early as the third quarter of last year.”

“After the World Health Organization declared COVID-19 as a pandemic about one year and four months ago, we can now say that the worst is behind us,” he said.

One of the signs Diokno cited was a surge in foreign direct investments by 45.1 percent percent for the first three months of 2021. At the same time, investment pledges with the Board of Investments increased by 65.6 percent while those with the Philippine Economic Zone Authority rose by 53.9 percent in the first quarter of 2021.

“As you know, investment approvals are a good leading indicator for actual investments, two or more years down the road,” Diokno said.

Diokno also took note of the latest jobs data which showed that the unemployment rate declined from the record 17.6 percent in April 2020 to 7.7 percent in May 2021.

Following the trend of recovery from previous months, he said that total employment remains above pre-pandemic levels with a net job creation of 2.2 million since January 2020.

The latest data on Purchasing Manager’s Index (PMI), a measurement of economic activity, have also reverted to expansion mode in June at 50.8, while trade has picked up in the first four months of 2021, with exports and imports expanding by 19 percent and 21.9 percent from the same period in 2020.

Even as business confidence weakened for the current quarter due to concerns on the surge of COVID-19 cases last March and April, consumer sentiment continued to improve.

Most people are citing as reasons for optimism the expectations of more jobs and permanent employment, additional or higher income as government continues to ease mobility restrictions amid accelerated vaccine rollout and the sustained implementation of measures to address challenges from the pandemic.

The BSP chief added that dollar remittances from expatriate Filipinos rose by 4.8 percent for the first four months of the year from 2020.

“This highlights the sustained resilience of overseas Filipino remittances,” he said. “Last year, they declined by a mere 0.8 percent versus the double-digit decline projected by private sector analysts.”

Diokno cited the National Economic and Development Authority which, due to the decline rate of contraction of the economy, predicted that the Philippines “can look forward to a positive gross domestic product growth in the second quarter of this year despite the stricter quarantine restrictions due to the recent virus surge.”

Nonetheless, the central bank chief pointed out that the economy remains at risk especially due to the uneven pace of vaccine rollout in the country and around the world.

TSB