Vaccination 'crucial' in economic rebound: BSP chief

ABS-CBN News

Posted at May 27 2021 05:16 PM

Vaccination 'crucial' in economic rebound: BSP chief 1
People who were inoculated with Sinovac COVID19 vaccine prepare to exit the Marikina Sports Center on May 25, 2021. George Calvelo, ABS-CBN News/File

MANILA - The ongoing inoculation drive will lead to improved economic activities as well as boost consumer demand and loans, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Thursday.

"As soon as we have a big chunk of our population vaccinated, that will improve sentiment and consumer demand, which in turn will improve economic activity, and more people will borrow from banks. That will be a crucial element in addressing the lack of demand at the moment," Diokno said in a virtual briefing.

Diokno said the BSP is monitoring upside pressures to inflation that such as the world oil prices since the country is an importer of the commodity.

But price pressures have "remained subdued due to the amount of prevailing slack in the domestic economy," he said. Rising oil prices have not led to higher inflation, he added.

Inflation is likely to hover above the government target band of 2 to 4 percent before settling within target by 2022, the BSP earlier said. 

Although Diokno deferred commenting on the Bayanihan 3, he said the 2021 and the remaining 2020 budget as well as billions of pesos in approved loans for use of local governments could add as economic stimulus.

The country's gross domestic product (GDP) contracted by 4.2 percent in the first quarter, the fifth straight quarter of contraction. The Q1 figures however were still better compared to the 8.3 percent drop in the fourth quarter of 2020.

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-- with a report from Warren De Guzman, ABS-CBN News