Return to prepandemic growth expected this year

With the growth of gross domestic product (GDP) exceeding the goal in 2021, the government is optimistic that the Philippine economy might regain prepandemic levels this year barring any “complications with the COVID-19 virus,” according to the inter-agency Financial Stability Coordination Council (FSCC).

The FSCC consists of the Department of Finance, Insurance Commission, Philippine Deposit Insurance Corp., Securities and Exchange Commission and the Bangko Sentral ng Pilipinas (BSP), which leads the body.

Preliminary data suggest that Philippine GDP in 2021 grew by 5.6 percent, which surpassed that target range of 5 percent to 5.5 percent.

In its 57-page report for the second semester of 2021, the FSCC said the recovery from the sharp contraction of the economy in 2020 was underway in 2021, particularly in the second and third quarter—even if income was still below 2019 levels.

“If we go by the Spanish Flu, the pandemic itself took three years but regular flu vaccines did not become routine until three decades after,” the council said.

“From what we have seen, the economy will get back to 2019 country income by 2022, the third year of the pandemic,” it added. “Assuming a 5 percent real growth for 2021 and 7 percent thereafter, the point of recovering lost incomes takes us to the fourth quarter of 2023. That assumes further that there are no complications with the COVID-19 virus.”

During the launching of the report on Wednesday, BSP Governor Benjamin Diokno—who also sits as FSCC chair—said the latest results highlighted the importance of sustaining the economy’s momentum toward full recovery and leveraging the gains of 2021 while learning the lessons of COVID-19.

“We are pleased to see how regulators and economic agents came together to help achieve, and even exceed, growth expectations,” Diokno said, referring to the council’s member-agencies.