Economy back to 75 percent capacity by July, Bangko Sentral says


Posted at Jun 02 2020 10:01 AM | Updated as of Jun 02 2020 10:07 AM

Economy back to 75 percent capacity by July, Bangko Sentral says 1
A commuter on board a bus and a traffic enforcer both wear face masks as the Philippines relaxed its pandemic lockdown to allow work to resume at limited capacity. Photo taken on June 1, 2020. George Calvelo, ABS-CBN News

MANILA -- Bangko Sentral Governor Benjamin Diokno said Tuesday the economy could be back to 75 percent capacity by July, after the Philippines eased one of the world's longest lockdowns.

The economy is running at half capacity after Metro Manila and other urban areas shifted to general community quarantine or GCQ with fewer restrictions compared to the 11-week enhanced community quarantine, he said.

"It's good that we have opened up the economy especially for the MSMEs," Diokno said, referring to micro, small and medium enterprises.

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Diokno will convene the Monetary Board on June 25 after cutting the benchmark interest rate by 125 basis points this year, 100 of which was delivered during the lockdown or enhanced community quarantine.

The governor has authority from the board to cut the reserve requirement ratio for banks by another 200 basis points.

Monetary authorities are looking at several indicators, including inflation and GDP numbers to decide whether to cut the overnight borrowing rate and the RRR further.

The government is projecting a gross domestic product contraction of 2 to 3.4 percent this year, after the economy shrank for the first time in 22 years during the quarter ended March.

The April to June period contraction is expected to exceed the 0.2 percent recorded in the previous quarter as the full effect of the lockdown is reflected.