THE members of the Bangko Sentral ng Pilipinas’ (BSP) monetary board are expecting the country’s real gross domestic product (GDP) to return to pre-pandemic levels toward the latter end of next year.
In the highlights of the most recent monetary board meeting published just last week, MB members said that based on the latest projected growth path of the country, real GDP is seen to return to its 2019 level by the third quarter of 2022.
“The domestic economy contracted by 4.2 percent in the first quarter of 2021, but could start to rebound from the second quarter of 2021 onwards,” the BSP monetary board meeting highlights read.
“Meanwhile, the recovery in growth for the second half of 2021 and 2022 is expected to be supported by the implementation of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) and FIST laws as well as the overall recovery in global economic activity,” it added.
The CREATE law was signed by President Duterte toward the end of March this year. The law cuts corporate income tax (CIT) rate—the highest in the Asean region—and rationalizes the country’s fiscal incentives system.
The FIST law, meanwhile, was implemented toward the end of March. The law allows for the establishment of corporations to invest in or acquire non-performing assets of covered financial institutions.
The monetary board’s forecast is slightly more optimistic than Moody’s Analytics forecast, which was released last month.
Moody’s Analytics said the Philippines isn’t forecast to return to pre-pandemic levels of output until the end of 2022.
“This is in contrast with China, Taiwan, South Korea and Vietnam, which have returned to previous output levels, while Indonesia and Thailand are on track to return this year.
This makes the Philippines the clear laggard in Asia,” Moody’s Analytics senior Asia pacific economist Katrina Ell and Moody’s associate economist David Chia said.
The Philippine economy plunged into recession in 2020 due to the disruption caused by the global health crisis. Last year, the country’s gross domestic product (GDP) shrank by 9.5 percent on average.
The BSP monetary board is set to meet on June 24 for their fourth monetary policy meeting for the year.