BSP Gov: 2021 proved mankind’s resilience again

Bangko Sentral ng Pilipinas (BSP) Gov. Benjamin Diokno said 2021 will be remembered not only because of the pandemic but as another year of record-low interest rate — a measure eyed to help lift the economy while ensuring financial inclusion and digitalization of financial transactions.

Diokno said that to date, BSP’s key policy rate stands at 2%, a level kept since November 2020 to encourage banks to lend more to help spur economic activity that by the pandemic’s impact.

The BSP Monetary Board (MB) slashed the central bank’s key policy rates by a total of 200 basis points last year, which is among its contribution to address the pandemic’s economic impact.

The BSP has so far injected around P2.3 trillion worth of liquidity into the domestic economy through various measures like rate cuts and reduction in the banks’ reserve requirement ratio (RRR), which has also been cut by as much as 200 basis points.

Diokno stressed that the year “2021 proved mankind’s resilience yet again.” After five quarters of negative prints, the  Philippines, posted two consecutive quarters of growth starting in the second quarter of this year.

Measured by gross domestic product (GDP), the country’s economy grew by 12% in the second quarter of 2021. a turn-around from the decades-low -17% in the same period last year. It was followed by a 7.1% GDP growth in the third quarter, which made economic managers revise upwards the growth target for the year, after cuts in the previous months, to 5-5.5%.

The GDP trend also saw the drop in unemployment to around 7.4% last October after rising to 17.6 percent in April last year when the government implemented lockdown to address the spread of the Covid-19 pandemic.

The manufacturing sector has also recovered, with purchasing managers index (PMI) registering an eight-month high of 51.7%  last November and trade sustained its recovery. The trend  continued as the government improved its quarantine measures and allowed more people to work and let the economy slowly go back to its pre-pandemic activities.

“The Philippines got better at containing the virus, although we must all remain vigilant as new variants are discovered. The government’s virus-containment strategy has shifted from wide-area to more targeted granular lockdowns,” Diokno said.