MANILA, Philippines — Bank of China expects the Philippine economy to recover in the fourth quarter of the year from the fallout brought about by the coronavirus disease 2019 or COVID-19 pandemic.
Deng Jun, country head of Bank of China Manila, said the Chinese economy has recovered in the second quarter with a gross domestic product (GDP) growth of 3.2 percent after contracting by 6.8 percent in the first quarter.
“A positive indication for all other countries on the road to recovery,” he said.
Deng said the local economy’s recovery could last through the first half of next year.
The country’s GDP contracted by 0.2 percent in the first quarter following the imposition of the enhanced community quarantine in the middle of March to prevent further spread of COVID-19.
Economic managers penned a GDP contraction of two to 3.4 percent this year, ending more than two decades of positive growth or since the 0.5 percent contraction in 1998 due to the Asian financial crisis.
The Development Budget Coordination Committee, however, sees the economy rebounding next year with a GDP growth rate of eight to nine percent.
Deng said the Philippines ranked first in Southeast Asia in terms of growth rate of renminbi (RMB) clearing volume as of the end of June, ahead of countries like Singapore, Indonesia, and Malaysia.
Data from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network showed the total volume of RMB cleared in the Philippines jumped 138 percent to 302.51 billion Chinese yuan.
The Philippines ranks as the 22nd largest RMB clearer among 46 countries and regions around the world.
Deng said the growth could be attributed to the increased awareness about the benefits of using RMB as a settlement and payment currency between China and the Philippines
“More and more enterprises are finding that direct conversion of RMB to peso, instead of converting it first to US dollar, can help save on friction costs and hedge foreign exchange exposure risks,” Deng said.
Bank of China Manila is the officially designated RMB clearing bank for the Philippines and a member of the Philippine RMB Trading Community (PRTC), a community of 14 banks with a mission of promoting direct peso-yuan exchange.
Since its establishment in 2018, the PRTC has enacted several initiatives that have helped grow the RMB market in the country. These include building the local RMB infrastructure as well as holding several local and international RMB market education sessions.
Bank of China remains optimistic about the future of RMB in the Philippines despite the economic slowdown brought on by the global pandemic.
“Our confidence in the continuous growth in RMB clearing volume comes from the increasing trade volume between China and the Philippines. There are many upcoming investments from China to the Philippines that will be cleared in RMB and we will continue to promote RMB as a payment and settlement currency for the trade and investment activities between the two countries by highlighting it as an efficient and cost-saving payment currency,” Deng said.