MANILA (UPDATE) - The worst is over for the pandemic-hit Philippine economy, and a "remarkable rebound" is expected this year, the head of the Bangko Sentral ng Pilipinas said on Tuesday.
"The worst is behind us. The recovery phase has begun," BSP Governor Benjamin Diokno told the Reuters Next conference, citing 'green shoots' such as improvements in remittances and foreign direct investments (FDI).
Remittances from overseas Filipinos have so far defied bleak forecasts and continued growing despite the effects of the COVID-19 pandemic on countries where expatriate Filipinos work.
The country meanwhile booked FDI net inflows amounting to $423 million in October last year, albeit 24.5 percent lower than the $561 million net inflows recorded in the same month in 2019, the BSP said.
Speaking ahead of the release of the 2020 GDP data on Jan. 28, Diokno said he also expected 'solid' growth in the December quarter and 'double-digit' growth in the second quarter of this year.
He added that "the current policy is sufficient to carry us through" after the economy suffered its first recession in nearly three decades in 2020.
The BSP delivered five interest rate cuts totaling 200 basis points last year, with the benchmark overnight reverse repurchase facility rate at a record low of 2 percent, making it among the world's most aggressive in policy easing.
It also cut banks' reserve requirement ratio by 200 basis points and provided extra liquidity support by purchasing government securities and extending loans to the government.
In sum, the central bank has injected about P2 trillion ($41.6 billion) into the financial system, equivalent to 10 percent of the country's GDP.
Diokno said inflation, which averaged 2.6 percent in 2020, will remain within the 2 percent to 4 percent target range this year and in 2022, providing space for the BSP to further support growth, if necessary.
The central bank is set to review monetary policy on Feb. 11.
The Philippine economy shrank 11.5 percent in the third quarter of 2020, after contracting 16.9 percent in the second quarter and 0.7 percent in the first.
In December last year, economic managers said they expect gross domestic product to decline by up to 9.5 percent for the whole of 2020.
But they also said GDP growth to bounce back to 6.5 to 7.5 percent in 2021 and 8 to 10 percent in 2022.
- With a report from Reuters