BSP: Economic data reflect sluggish recovery in early ‘21

THE Bangko Sentral ng Pilipinas (BSP) said forward-looking economic indicators point to sluggish recovery in the beginning of the year.

In its recently published minutes of the latest monetary policy meeting, the monetary board members said that economic metrics usually measured and monitored for policy guidelines suggest a slowdown in economic activity in the early months of the year.

“Overall, the continued implementation of quarantine restrictions, tepid demand recovery of foreign markets, and slower-than-expected global vaccine distribution are expected to weigh on the domestic economy’s recovery,” the BSP said.

“Meanwhile, consumer and business sentiment have been aided by expectations of vaccine rollout. Greater fiscal support could also help minimize possible economic scarring and sustain the country’s nascent recovery,” it added.

The BSP particularly cited the more muted manufacturing activity in the first quarter of the year, including the declines in the country’s purchasing manager’s index (PMI).

IHS Markit reported that the country’s PMI in March hit 52.2, slightly declining from the 52.5 PMI in the previous month. The country’s PMI has been steadily declining since the start of the year.

The BSP also said mobility data as of end-February have reverted to below-baseline figures in the first two months of 2021.

“The Google mobility report showed that mobility indicators have fallen below baseline after peaking during the holiday season. Meanwhile, grocery and pharmacy have exceeded the baseline threshold in the last week of February but were still lower than the December 2020 record,” the BSP said.

The BSP’s muted outlook on the Philippine economy contrasts their view of the global economy.

“Global prospects have improved amid vaccine rollout although headwinds remain from renewed waves and new virus variants. Global economic output expanded faster amid improved demand conditions in both manufacturing and service sectors,” the BSP said.

In their last monetary policy meeting, the BSP retained its monetary policy meeting unchanged at an all-time low interest rate of 2 percent.

The BSP is expected to meet again on May 13 for its next monetary policy meeting.

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