Philippine economy over 'most difficult' period, now on 'rebound' stage, says BSP


Posted at Jul 27 2020 10:30 AM

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MANILA -- The country's current monetary policy stance "can hold" over the next few quarters as the economy has passed the "most difficult" period and is now on "rebound" towards recovery, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Monday.

"The current monetary stance can hold for the next few quarters and I’m positive that what we’ve done is sufficient. We have released into the system some P1.3 trillion," Diokno said on ANC.

The BSP cut interest rates by 50 basis points to a record low of 2.25 percent in June to help mitigate downside risks to growth and to boost market confidence.

It also slashed reserve requirements for thrift, rural and cooperative banks by 100 bps effective July 31.

"That is a big help for them because they are the biggest lenders to micro, small and medium enterprises. That cut translates into P10 billion of resources to thrift and rural banks... they are doing well, they are well-capitalized, profitable," Diokno said.

"The most difficult quarter is the second quarter, we’ve passed that. We’re now on the rebound stage. I’ve seen the recovery is like the Nike shoes (logo). We’re now looking at a less negative or slightly positive third quarter," added Diokno noting "a very nice" Christmas season ahead for consumers.

Economic growth in the second quarter will likely be worse than the January to March period as the full toll of the coronavirus lockdown is reflected, an economist said earlier. 

The Philippine economy will likely contract by 2 to 3.4 percent this year, based on revised government assumptions.