Gov’t spending to address lower consumption

MANILA – Government spending will be the key factor to ensure that domestic consumption remains strong amid fears brought by the threat of the coronavirus disease 2019 (COVID-19).

In an interview by journalists Thursday night, BDO Chief Strategist Jonathan Ravelas said people go out less lately to lessen their chances of being infected by the virus. He, however, said that since COVID-19 cases in the country remain low, people will eventually decide to go out again within the next few months.

In the meantime, the lower spending on malls and restaurants will have an im

pact on domestic consumption, which, he said, can be countered by stronger spending by the government for its infrastructure program, among others.

“Once we see the government really spending then you will see a big difference. The sentiment will change,” he said.

On Thursday, Philippine monetary officials said they continue to have policy space to implement measures to help boost domestic growth vis-àvis the impact on the growth of COVID-19.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said they are committed to implementing the 50 basis points reduction in the central bank’s key policy rates as he has indicated before.

He said rate cuts more than what they have projected earlier will depend on the need, thus, the necessity to continue to monitor the situation.

With these statements, Ravelas said the central bank chief stressed monetary officials’ readiness to tap its policy tools to continue to help buoy the economy.

He said a 50 basis point cut in the BSP’s key policy rates this year “is okay” and any reduction more than this should be “saved for the rainy day.”

“What the government now has is leeway on spending,” he said.

He cited as an example of government measures to lift domestic consumption the Hong Kong government’s decision to provide HK$10,000 cash handouts to permanent residents as the

China special administrative region (SAR) grapples with the COVID-19 epidemic.

He said the Philippine government may implement measures such as free movie tickets to people who spent a certain amount when they go to the mall to entice the public to go out and spend more again.

“Something like that. Those are potential types of tools of what the government can do to spur consumption in light of the fact that we are not really that affected by (the) virus,” he added. (PNA)