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FSCC says risks pose challenge to economy's return to pre-pandemic growth

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Warren De Guzman, ABS-CBN News

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img alt="People buy goods along Recto St. in Divisoria market in Manila on January 20, 2022. Preliminary results of the Asian Development Bank’s COVID-19 Country Assessment report shows the Philippines lagging its neighbors in a return to pre-pandemic growth rates with long-term effects of the pandemic on employment being a key concern. George Calvelo, ABS-CBN New" src="https://sa.kapamilya.com/absnews/abscbnnews/media/2022/news/02/02/20220120-covid-economy-manila-gc-1591.jpg"/><figcaption>People buy goods along Recto St. in Divisoria market in Manila on January 20, 2022. Preliminary results of the Asian Development Bank’s COVID-19 Country Assessment report shows the Philippines lagging its neighbors in a return to pre-pandemic growth rates with long-term effects of the pandemic on employment being a key concern. George Calvelo, ABS-CBN New</figcaption></figure></div> MANILA - The Philippine economy may have grown faster than anticipated in 2021 at 5.6 percent but there are risks that could pose challenges to this year&#x27;s prospects, the Financial Stability Coordination Council (FSCC) said Wednesday.The Bangko Sentral ng Pilipinas heads the FSCC or the inter-agency council which includes the Department of Finance, the Securities and Exchange Commission, the Insurance Commission, and the Philippine Deposit Insurance Corporation. It convenes quarterly to watch out for possible systemic risks to the Philippine financial system, and to identify what measures are needed to mitigate those risks. &quot;A few days ago, Q4 2021 Year-on-Year growth was reported to be at 7.7 percent, putting the full year expansion at 5.6 percent. This is a remarkable turnaround from what we experienced in the first year of Covid-19,&quot; BSP Governor Benjamin Diokno said. But an Office of Systematic Risk Management (OSRM) study, which it said was not a forecast, showed return to pre-pandemic growth trends may no longer be realistic.&quot;The market expectations of the future that anchored pre-COVID-19 decisions are no longer viable because of COVID-19. Therefore, markets are looking for a new anchor based on information that they can vet. Among others, this requires effective communication to properly advise stakeholders, against which they can make informed choices,&quot; the OSRM said.The National Economic and Development Authority (NEDA) has said the Philippine economy can finally grow back to its pre-pandemic size of P19.518 trillion (2019), having grown to P19.387 trillion as of the end of 2021. Economic manages have earlier said the return to pre-pandemic level could happen in the first quarter of 2022. However, that would still mean the Philippine economy lost two years of growth and is still behind the growth trend it enjoyed before the pandemic. Before COVID-19, the economy has been growing at an average of 6 percent.The Asian Development Bank earlier noted that the Philippines could be the last country in the region to get back to its pre-pandemic growth trajectory.But Socioeconomic Planning Secretary Karl Kendrick Chua said pending policy reforms, implementation of innovation laws and livestock bill, and the government&#x27;s Build, Build, Build program could accelerate growth.&quot;Our 2021 growth is higher than other regional economies, except Singapore. That gives us a boost,&quot; Chua said.The FSCC also highlighted that the pandemic has different effect on income groups. &quot;Given the disparities in socio-economic opportunities, the headline numbers may not fully reflect a widening gap between the “haves” and “have nots,&quot; the FSCC.&quot;This tells us that median numbers take on a bias towards the upside because the distribution is not symmetrical in the first place and disfavors the vulnerable,&quot; it added.In its 2021 Q2 report, the council said the poor would have much harder time recovering. There could also be an increase in the number of poor, it said. <ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/04/28/21/pandemic-worsened-ph-poverty-2020-adb">Pandemic &#x27;clearly&#x27; worsened PH poverty in 2020: ADB official</a></li>	<li><a href="https://news.abs-cbn.com/business/01/18/22/super-rich-thrive-as-covid-19-pushes-millions-into-poverty">Super-rich thrive as COVID-19 pushes millions into poverty</a></li>	<li><a href="https://news.abs-cbn.com/business/12/17/21/ph-family-of-5-needs-p12082-to-cover-basic-needs-psa">Filipino family of 5 needs P12,082 to cover basic needs in first half of 2021: PSA</a></li></ul>“COVID has been an uneven shock affecting those who were vulnerable to begin with the most, and to address that particular concern, there is an issue of social safety net in terms of public health, would be the number one concern,&quot; BSP Assistant Governor Johnny Ravalo said. Longer term concerns include income, savings and purchasing power, he said. &quot;And that is something that we will have to think about because it is something that does effect how the economy will move forward and particularly how households or how targeted households will traverse the challenges ahead,&quot; Ravalo said. The government is then urged to prioritize public health infrastructure to provide the public proper healthcare access.Livelihood programs and training or up-skilling programs can also help the poor provide for themselves and reduce their reliance on welfare. The FSCC also noted that while social amelioration programs under the country&#x27;s coronavirus response laws or the Bayanihan Acts helped some 18 million vulnerable households, it also accelerated fiscal spending which resulted in heavier debt burden on the government.Based on the latest data from the Philippine Statistics Authority, updated as of the first semester of 2021, 23.7 percent of the Philippine population are poor or are unable to provide for their own basic needs. That translates to 26.14 million Filipinos, which the FSCC suggests could be understated. <div>RELATED VIDEO:</div><figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=1913695" width="100%"></iframe></figure><div class="iwantbar">Watch more in <a href="//www.iwantv.com.ph/">iWantv</a> or <a href="//tfc.tv/">TFC.tv</a></div>

The Philippine economy may have grown faster than anticipated in 2021 at 5.6 percent but there are risks that could pose challenges to this year's prospects, the Financial Stability Coordination Council (FSCC) said Wednesday.

FSCC says risks pose challenge to economy's return to pre-pandemic growth

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FSCC says risks pose challenge to economy's return to pre-pandemic growth

Warren De Guzman,

ABS-CBN News

Published February 02, 2022 04:56 PM PHT

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