The National Economic and Development Authority said Monday it is keeping the original gross domestic product growth target of 6.5 percent to 7.5 percent this year amid the lingering COVID-19 pandemic.
Economic Planning Secretary Karl Chua said it it is too early to tell if the projection is doable or not. Chua made the comment in response to some quarters that said the projection could not be met with the implementation of the latest rounds of community quarantines in NCR Plus to prevent the further spread of the disease.
“We don’t yet see the impact of the ECQ [and MECQ to the economy]… We will have to wait for more data,” Chua said, during the virtual Sulong Pilipinas 2021: Partners for Progress forum.
Chua said the economy had significant improvements prior to the implementation of the community quarantines in NCR and adjacent provinces. He cited the rebound in imports in February while exports posted lesser contraction.
The Philippine Statistics Authority reported that total merchandise trade amounted to more than $12.9 billion in February, up 0.6 percent from $12.8 billion a year ago. Imports snapped a downtrend since May 2019 after it posted a year-on-year growth of 2.7 percent to $7.60 billion from $7.40 billion.
Exports contracted by only 2.3 percent in February 2021, from an annual decrease of 4.8 percent in January.
Meanwhile, the Purchasing Managers’ Index stayed above 50 in the first three months, indicating expansion of manufacturing activities.
“The ECQ now is different from last year’s. Aside from that, constructions are ongoing,” Chua said, adding the community quarantines might affect GDP growth “but we still have eight more months to recover.”
Chua said what was noteworthy was the government’s package of recovery measures implemented earlier which was equivalent to about 15 percent of the gross domestic product. He said the rollout of vaccination programs could be a catalyst for faster recovery.
Meanwhile, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the Monetary Board would keep monetary policy accommodative in support of recovery. He said the economy was at the “tail end of the crisis,” with the rollout of vaccination program ongoing.
“We recognize that the economy is still in its nascent recovery phase,” Diokno said.“The accommodative monetary policy settings provide significant stimulus to demand and should be allowed to continue to work their way through the economy to bolster recovery in private consumption and investment”
The BSP so far infused more than P2 trillion in liquidity into the financial system, equivalent to 11 percent of the GDP since the onset of the pandemic.
Among the BSP’s long list of COVID-response measures were the series of policy rate cuts last year totaling 200 basis points. The BSP also cut the reserve requirement for universal and commercial banks.
Meanwhile, Finance Secretary Carlos Dominguez III said the game-changing reforms over the last five years under the present administration have largely to the country’s overall macroeconomic stability especially during the onslaught of the COVID-19 pandemic.
Dominguez said these reforms had enabled the government to respond decisively to the global health and economic crises spawned by the protracted COVID-19 pandemic while ensuring the fiscal sustainability of these initiatives.
He said the Philippines’ direct response to the COVID-19 crisis so far amounted to P2.76 trillion, equivalent to 15.4 percent of the GDP. These responses included safety nets and stimulus measures under the Bayanihan to Heal As One Act (Bayanihan 1) and the Bayanihan to Recover As One Act (Bayanihan 2) to assist pandemic-hit families and businesses; strengthen the health sector to fight COVID-19 and ensure the safety of medical frontliners; and keep the economy afloat and support its quick recovery.
Dominguez said that instead of throwing money at the crisis, the government adopted the more prudent strategy of expanding lending to pandemic-hit enterprises by infusing more capital into government financial institutions for them to lend more money to productive sectors of the economy.
