ING Bank Manila senior economist Nicholas Mapa
MANILA – With domestic growth still in contraction in the first quarter of 2021, an economist expects greater policy support from the Bangko Sentral ng Pilipinas (BSP) until the economy recovers.
The Philippine Statistics Authority (PSA) on Tuesday reported the -4.2 percent output of the economy, as measured by gross domestic product (GDP), better than the previous quarter’s -8.3 percent and -9.6 percent in 2020.
In a report, ING Bank Manila senior economist Nicholas Mapa said attention is now towards the rate setting meeting of the policy-making Monetary Board (MB) on Wednesday, a day earlier because of the Eid’l Fitr holiday on Thursday.
He expects the Board to keep the BSP’s key rates steady this week and until the rest of the year, citing BSP Governor Benjamin Diokno’s statement on monetary authorities’ readiness to further support the economy to cushion the impact of the pandemic.
Mapa also cited that inflation remains higher than the government’s 2-4 percent target band until 2023 but said “price pressure appears to be stabilizing as authorities move to implement supply side remedies to help lower the cost of food items.”
“Although we continue to expect 2Q (second quarter) GDP to post growth on a YoY (year-on-year) basis, we may have to trim our expectations especially if partial lockdowns are extended through May,” he said.
Mapa added the softer corporate demand for the dollar leads to weaker imports and an improved external position, “a development that will be supportive of PHP (Philippine peso) in the near term.” (PNA)
