Banks see 2021, 2022 GDP growth to miss target

Lenders expect economic growth to be lower than the government’s target this year and the next as they remain wary about the impact of the coronavirus pandemic on the country, a Bangko Sentral ng Pilipinas (BSP) poll found.

This Nov. 5, 2020 file photo shows one of the buildings inside the Bangko Sentral ng Pilipinas complex on the corner of Roxas Boulevard and Pablo Ocampo (Vito Cruz) Street in Manila. PHOTO BY J. GERARD SEGUIA

In a report on Friday, the central bank said results of its latest Banking Sector Outlook Survey (BSOS) showed that “banks pose a more subdued optimism on the country’s economic prospects as risks remain tilted to the downside due to the effects of [the] Covid-19 pandemic.”

During the second half of 2020, 64.6 percent of the respondents forecast real gross domestic product (GDP) growth to return to less than 6.0 percent to 6.3 percent within the next two years.

The range is lower than the government’s official growth target of 6.5 to 7.5 percent this year and 8 to 10 percent in 2022. But it is better than its assumption of a 8.5- to 9.5-percent contraction in 2020.

Respondents also identified accommodation (hospitality or tourism), transportation, and wholesale and retail trade as the top three industries that were heavily affected by the pandemic and the restrictive measures imposed to contain it based on total loan portfolio evaluation.

They expect wholesale and retail trade to recover within six months to one year; accommodation, one to two years; and transportation, about two years.

“Banks’ positive economic outlook translated to renewed confidence in the stability of the banking system,” the central bank said, noting that 68.8 percent of the respondents see a stable Philippine banking system in the next two years.

The figure is higher than the 0.8 percent projected in the second half of 2019.

“The news of a high efficacy [rate] (more than 90 percent) of the Covid-19 vaccines being developed and soon to be rolled out by leading pharmaceutical and biotechnology companies, partly buoyed banks’ risk-on sentiment,” the BSP said, referring to those developed by Pfizer and its German partner BioNTech, Moderna, and AstraZeneca.

The projected return to economic growth and the stable outlook on the banking system influenced 60.5 percent of respondents to forecast double-digit growth in bank assets, it added.

This, however, is lower than the 70.7 percent projected in the second semester of 2019.
According to the Bangko Sentral, the BSOS serves as a measure of proactive and forward-looking approach to surveillance and financial supervision.

The latest BSOS covered universal and commercial banks, thrift banks, and 80 rural and cooperative banks (RCBs) to include the top 20 RCBs in terms of total loan portfolio, plus 60 randomly selected RCBs.

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