BSP’s Diokno on Omicron variant’s economic impact: Too much exaggeration

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno dismissed the potential economic impact of the Omicron variant of the COVID-19 virus as he banks on the government’s vaccination drive.

Global economists have expressed fears that the Omicron variant would impact the still recovering pandemic-hit world economy. 

“We will continue our accommodative monetary policy until needed by the national government. We are not so concerned with the new virus, new variant rather,” Diokno said during his weekly virtual press chat on Thursday.

“There is too much exaggeration on the impact of that,” he added.

Accommodative monetary policy refers to central banks’ move to increase money supply to boost the economy by lowering interest rates.

The central bank kept interest rates at record lows for eight straight months in a bid to boost economic activity amid the COVID-19 pandemic. 

Interest rates or monetary policy rates are tools used by central banks to influence money supply which keeps the economy running and at the same time keeps inflation under control.

The Philippines is also recovering from a pandemic-induced recession after growing positively for two straight quarters this year.

In particular, the economy as measured by gross domestic product (GDP)— the total value of goods and services produced in a country in a specific period— grew 7.1% in the third quarter, a reversal from a contraction of 11.4% in the same period last year albeit lower compared to the 12% growth posted in the second quarter of 2021.

Year-to-date, the country’s GDP grew 4.9%, within the upper end of the government’s downwardly revised target band of 4% to 5% for the entire 2021.

To preserve the gains achieved so far, the central bank chief is betting on the vaccination efforts of the government.

“I think the best thing to do for the Philippines is to vaccinate, vaccinate, vaccine and we have sufficient vaccines available,” Diokno said. — RSJ, GMA News