It ain’t all bad: Philippines poised for strong recovery, central bank says

Things are still awkward in the Philippines as the coronavirus continues keeping the country in a choke, while the government on April 25 once more extended the lockdown in the capital region and other provinces considered to be high-risk areas until May 15 in an ongoing effort to control the Covid-19 outbreak.

Under the lockdown guidelines, schools, public transport and work in private and most government offices remain suspended and all but essential businesses, as well as restaurants and sports and entertainment venues in the said areas stay closed and people are asked to stay indoors most of the time. Eight provinces in the central and southern Philippines, where cases of Covid-19 were increasing, were also put under stricter “enhanced community quarantine” measures.

To make thing worse for those stuck at home, several local governments, among them Manila, Quezon City, Cebu City and Iloilo, have enforced a ban on liquor sales and consumption, saying they seek to avoid “mass gatherings” of people “drinking together in the streets, having parties and doing karaoke.“

Critics say there was no point in prohibiting booze sales since the lockdown was already effectively restricting movements and potential gatherings on the street were quickly dissolved by police. But at the same time, producers of alcoholic drinks were losing out on revenue during the bans and the government on much-needed tax income, which makes the booze prohibition a counterproductive exercise, they argue.

Light at the end of the tunnel

However, while the situation is currently far beyond dreary for probably everybody, and particularly those who are suffering financial losses from being out of job, there seems to be light at the end of the tunnel.

According to Philippine central bank central governor Benjamin Diokno, people need to be patient until things turn around, and they eventually will. Diokno said the Philippines was poised for a “U-shaped economic recovery” in 2021 after a likely recession this year as the pandemic halted most of the economy since mid-March.

Growth will probably bounce back to about 7.7 per cent in 2021 after an estimated 0.2% contraction this year as government policy support measures “gain traction,” Diokno told reporters in a virtual press event on April 25.

All hopes on the virus subsiding until the second half of the year

“The strong recovery is based on the assumption that the pandemic is contained until the second half of 2020,” he said, adding that, as things stand, the country would not risk a debt default given its strong fiscal position.

The economy would slow down in the first quarter this year and contract in the second and third quarters, before gradually recovering in the fourth, he noted.

“The Philippines was in a sound fiscal and monetary state when the pandemic hit the country. The budget deficit was modest. The revenue base has been expanded with a series of new tax laws and improved revenue administration,” Diokno said.

He added that the country’s monetary and financial conditions were “sound and stable” following a series of reforms that made the banking industry sound and sufficiently capitalised, with a “lot of buffers,” while for the overall budget situation, the collapse in global crude oil prices was also helpful for a net oil importers such as the Philippines.



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Things are still awkward in the Philippines as the coronavirus continues keeping the country in a choke, while the government on April 25 once more extended the lockdown in the capital region and other provinces considered to be high-risk areas until May 15 in an ongoing effort to control the Covid-19 outbreak. Under the lockdown guidelines, schools, public transport and work in private and most government offices remain suspended and all but essential businesses, as well as restaurants and sports and entertainment venues in the said areas stay closed and people are asked to stay indoors most of the time....

Things are still awkward in the Philippines as the coronavirus continues keeping the country in a choke, while the government on April 25 once more extended the lockdown in the capital region and other provinces considered to be high-risk areas until May 15 in an ongoing effort to control the Covid-19 outbreak.

Under the lockdown guidelines, schools, public transport and work in private and most government offices remain suspended and all but essential businesses, as well as restaurants and sports and entertainment venues in the said areas stay closed and people are asked to stay indoors most of the time. Eight provinces in the central and southern Philippines, where cases of Covid-19 were increasing, were also put under stricter “enhanced community quarantine” measures.

To make thing worse for those stuck at home, several local governments, among them Manila, Quezon City, Cebu City and Iloilo, have enforced a ban on liquor sales and consumption, saying they seek to avoid “mass gatherings” of people “drinking together in the streets, having parties and doing karaoke.“

Critics say there was no point in prohibiting booze sales since the lockdown was already effectively restricting movements and potential gatherings on the street were quickly dissolved by police. But at the same time, producers of alcoholic drinks were losing out on revenue during the bans and the government on much-needed tax income, which makes the booze prohibition a counterproductive exercise, they argue.

Light at the end of the tunnel

However, while the situation is currently far beyond dreary for probably everybody, and particularly those who are suffering financial losses from being out of job, there seems to be light at the end of the tunnel.

According to Philippine central bank central governor Benjamin Diokno, people need to be patient until things turn around, and they eventually will. Diokno said the Philippines was poised for a “U-shaped economic recovery” in 2021 after a likely recession this year as the pandemic halted most of the economy since mid-March.

Growth will probably bounce back to about 7.7 per cent in 2021 after an estimated 0.2% contraction this year as government policy support measures “gain traction,” Diokno told reporters in a virtual press event on April 25.

All hopes on the virus subsiding until the second half of the year

“The strong recovery is based on the assumption that the pandemic is contained until the second half of 2020,” he said, adding that, as things stand, the country would not risk a debt default given its strong fiscal position.

The economy would slow down in the first quarter this year and contract in the second and third quarters, before gradually recovering in the fourth, he noted.

“The Philippines was in a sound fiscal and monetary state when the pandemic hit the country. The budget deficit was modest. The revenue base has been expanded with a series of new tax laws and improved revenue administration,” Diokno said.

He added that the country’s monetary and financial conditions were “sound and stable” following a series of reforms that made the banking industry sound and sufficiently capitalised, with a “lot of buffers,” while for the overall budget situation, the collapse in global crude oil prices was also helpful for a net oil importers such as the Philippines.



Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

$
Personal Info

Donation Total: $10.00

 

 

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