benjamin e diokno : bangko sentral ng research fair “ central banking in the time of pandemic ” keynote speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the bsp research fair “ central banking in the time of pandemic ”, organized by the bsp research academy, virtual, 12 july 2021. * * * good morning to our speakers and participants. thank you for gracing this milestone event for the bsp, a timely testimonial of the bsp ’ s support for robust and evidence - based research, especially as we celebrate 72 years of central banking in the philippines, and 28 years as the bangko sentral ng pilipinas. this research fair represents many firsts for the bsp : it is our first international research fair organized by the recently established bsp research academy. as you know, we have a main conference for day 1 and a less formal research cafe for day 2, co - hosted with the seacen centre. it is also the first completely virtual international conference organized by the bsp, where various researchers from local and international institutions are presenting their papers. this is also the first international conference of this nature we have organized since the onset of the pandemic. this year ’ s theme, “ central banking in the time of pandemic ” is the most pressing issue facing central banks today. the repercussions of the covid - 19 pandemic are unprecedented in our global economic history, even when compared to the spanish flu of 1918 — the most devastating pandemic of all time in terms of the number of deaths. this is also because the covid - 19 pandemic has, in effect, caused a trio of shocks — a supply shock, a demand shock, and a shock to financial systems, as well. the covid - 19 pandemic is the first epidemic in the world ’ s history that has caused significant damage not only to people, the health sector and the macroeconomy, but also posed a considerable potential threat to the stability of financial sectors. financial market reaction to the uncertainty and risks during the acute stages of the covid - 19 outbreak have led to significant strains in global financial markets. in the first quarter of 2020, there were sharp downfalls in the equity markets in advanced economies, as well as in emerging market economies. the speedy and substantial

on food price inflation ( percentage points ) sources : kotz et al ( 2023 ). notes : estimated with a global panel regression approach using monthly prices and high - resolution climate data. cumulative deviation of food inflation from baseline after 12 months due to extreme temperatures from june to august are shown. the chart is based on combining elasticities of a 1°c increase in temperatures with results from 21 global climate models. projected temperatures of a 2022 - like summer ( i. e. in the upper tail of the temperature distribution ) in future climates are retrieved from climate model results under an optimistic ( “ below 2°c by 2100 ” according to representative concentration pathway ( rcp ) 2. 6 ) and a pessimistic ( “ hot house world ” according to rcp8. 5 ) emissions scenario. impacts could be reduced through ambitious adaptation to warmer climates. second, a slow green transition increases the economic impact of these supply shocks. europe paid a high price for its dependence on fossil fuels when russia ’ s war of aggression in ukraine triggered a sharp rise in energy prices and a spike in inflation. taken together, the increase in prices of energy and energy - sensitive goods and services contributed around 6 percentage points to euro area inflation at its peak above 10 % in october 2022 ( chart 4 ). greater availability of renewable energy would have reduced the magnitude of the shock. chart 4 contribution of components of euro area headline hicp inflation source : eurostat and ecb calculations. notes : hicp is the harmonised index of consumer prices ( hicp ). hicpx refers to hicp inflation excluding food and energy, and can be broken down into hicp non - energy industrial goods ( neig ) and hicp services. items are classified into energy - sensitive and not energy - sensitive at sub - item level ( coicop5 ). an item within hicp neig and hicp services is classified as energy - sensitive if its energy input cost share is greater than the average energy input cost share for, respectively, hicp neig and services. [ 18 ] last observation : april 2024. third, beyond inflation, climate change and extreme weather events can also affect the capital stock and labour productivity. [ 19 ] for instance, studies have found that a 1°c increase in temperatures above 25°c reduces productivity by roughly 2 %. [ 20 ] climate change constrains potential output and productivity growth, thereby reducing the level at which gdp growth and real