‘Health, transport issues need to be addressed’
BESIDES having a low-interest environment, the government should also address consumers’ health and transportation CONCERNS TO BOLSTER THEIR CONfiDENCE AMID THE coronavirus disease 2019 (Covid-19) pandemic, A BANK OF THE PHILIPPINE ISLANDS (BPI) OFfiCIAL said on Monday.
During The Manila Times
“Road to Recovery: Turning the Crisis into Opportunities” online forum, BPI lead economist Emilio Neri pointed to the rebound in consumption as a bright spot during the ongoing public health crisis.
“The [lowered] interest rates, together with the abundance of liquidity in [this] time of crisis, is actually very timely and forceful enough,” he said.
This comes after the Bangko Sentral ng Pilipinas announced on Thursday that it slashed interest rates by 50 basis points. This brought overnight borrowing, lending and deposit rates to 2.25 percent, 1.75 percent and 2.75 percent, respectively.
Neri said these rate cuts, along with the BSP’s banking regulatory initiatives, allowed the Philippines to continue enjoying an abundance of domestic liquidity and a low-interest environment.
Another bright spot is the country’s ability to capitalize on trade and other linkages with the Association of Southeast Asian Nations (Southeast Asia) and China, according to him.
Noting that the Asean has over
taken the European Union (EU) as the East Asian country’s largest trading partner since early this year, Neri said this meant the Southeast Asian manufacturing sector would likely “recover early due to its strong linkages with the value chains in the region. That, of course, includes the Philippine economy.”
“While we continue to see declines, or expectations of declines, in manufacturing, the degree
by which it is declining is going down, with the exception of Indonesia,” he added.
“The third bright spot is, as we get closer to [finding a coronavirus] vaccine, [Filipino] consumers are likely to see significant spending recovery ahead of everybody else, as long as jobs can be revived and incomes slowly return to normal.”
But Neri pointed out that despite being encouraged by the lowered interest rates, consumers would first need to be confident to “go out.”
“What we need to do is make people have the confidence to slowly go out, and to be able to
do this, we need to address health concerns,” he said.
The BPI economist also said that while the government was already working on this, more work is needed on the health data to make it more reliable.
Consumers would also want to make sure the public transportation to become available would ensure that they would stay healthy, he added.
“Those two elements are very crucial to boost the confidence of consumers to go back, aside from the low interest-rate environment. Without those complementing elements, monetary easing and the availability of liquidity can only go so far.”
Monday’s online forum is the second organized by TheTimes since the government put Metro Manila and other areas of the country under community quarantine to contain the spread of Covid-19. The first, “Business as Usual Under the New Formal,” was held on May 28.
The forum’s co-presenters are BDO Unibank Inc., BPI, BPI Philam and San Miguel Corp. SM Investments Corp. is the sponsor. Special partners are the Cagayan Economic Zone Authority, Entrego, Maybank and PayMaya.