benjamin e diokno : the asean and the philippine economyinsights for 2021 speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the manila times economic forum, 25 february 2021. * * * the manila times president and ceo, mr. dante ang ii ; my co - speakers dof secretary dominguez, lito camacho of credit suisse, and eduardo francisco of bdo capital ; and everyone joining us online, good morning. what a difference a year makes! in the same forum at about the same time last year, i spoke about sustaining the dynamics of robust economic growth and low inflation for the philippine economy in 2020. weeks later, the pandemic happened and by year - end, the philippine economy contracted into its lowest gdp outturn since world war ii. the old saying, “ this too shall pass, ” is a hopeful reminder as we enter the economic recovery phase. expectedly, the revival of the economy could be gradual, uneven and arduous. yet, keeping the balance between growth and inflation remains the overarching goal of our policy actions, especially as we work to ensure that economic scarring from the covid - 19 crisis will not be as deep and wide as expected. let me share some insights on the asean and philippine economic outlook for 2021, focusing on the bsp ’ s policy actions to support the national government ’ s whole - of nation approach in addressing the current crisis. to start, the international monetary fund ( imf ), in its world economic outlook ( w eo ) update released in january, sees the global economy is projected to grow by 5. 5 percent in 2021, a 0. 3 percentage point upward revision from the previous forecast. this reflects additional policy support in advanced economies and expectations of a vaccine - supported economic recovery. despite these, the pace of global growth is expected to be well below the pre - covid rate. on the upside, accelerated vaccine distribution and its effectiveness, and higher fiscal stimulus are expected to further lift global activity. the downside risks, however, include potential virus surge, including infection caused by new covid - 19 variants, and premature withdrawal of policy support before recovery is firmly rooted. on the regional front, the latest surveillance reports of multilateral agencies such as the imf, the world bank ( w b ), and the asian development bank ( adb )

the philippine banks built in compliance with the bsp regulatory requirements and years of favorable banking conditions, proved to be useful. the banks ’ capital adequacy ratio of 16. 3 percent and 16. 7 percent on solo and consolidated bases, respectively, are well above the bsp ’ s and international standards. meanwhile, the rise in bad debt remains manageable. non - performing loans ( npl ) and nonperforming assets ( npa ) ratios were modest at 3. 1 percent and 2. 1 percent, respectively, as of end - 2020. these numbers compared well with the double - digit levels recorded during the asian financial crisis. given these indicators, the philippine economy has the essential elements to post a strong recovery this year. the robust structural characteristics and sustained policy discipline are the most effective tickets out of this pandemic. rest assured that the bsp stands ready to extend the same set of policy measures implemented in 2020 to support the economy, as needed. as this crisis is unprecedented, the measures we have implemented in 2020 were just as unprecedented. we are one with the government in our commitment to push forward measures to soften the impact of the covid - 19 pandemic on the economy and our fellow filipinos. as of january 12, 2021, the bsp ’ s policy and liquidity easing measures had injected close to 2 trillion pesos in liquidity into the financial system. this amount is equivalent to about 11 percent of the country ’ s 2020 nominal gdp level. moving forward, the bsp ’ s actions and policy thrusts will continue to be anchored on its core mandates of promoting price and financial stability. o n monetary policy : the bsp will remain vigilant over the current inflation dynamics and operating environment with a forward - looking perspective to ensure that the monetary policy stance continues to support economic recovery and address any risks to our price stability mandate. on the financial sector : the bsp will intensify its monitoring and surveillance over its supervised institutions to ensure that they remain responsive to emerging risks and to promote the continued soundness, stability, resilience, and inclusivity of the banking system, particularly through the pursuit of enhanced digitalization. third, on the external sector : the bsp will continue to adopt policies that will help strengthen the economy ’ s resilience to external shocks. these will include maintaining a market - determined exchange rate, sustain a comfortable level of reserves, and keep the country ’ s external debt manageable.