Minor economic impact seen from Davao bombing

MANILA, Philippines – Knee-jerk investor reactions are expected as a result of the bombing in Davao City, but quick government response and the declaration of a state of lawlessness could be positive in the long run, state and industry officials said.

“Just minor reactions and transitory doubts at the most,” Socioeconomic Planning Secretary Ernesto Pernia said in a text message over the weekend.

Budget Secretary Benjamin Diokno, chair of the inter-agency body setting macroeconomic targets, said the Duterte administration’s economic program remained intact.

“The economic agenda is unchanged and moving forward,” he said in a separate text message.

At least 15 were killed and hundreds were wounded when an improvised explosive device rocked a night market on Roxas Avenue in Davao City Friday night. Police probe is ongoing.

The blast prompted President Duterte, a former mayor of the city, to declare a state of lawlessness nationwide, beefing up police security operations with the military. 

Diokno noted that the proclamation, which Malacañang immediately said was not synonymous to martial law, should be welcomed by investors since it shows Duterte’s “decisiveness” as a leader.

“I think investors’ reaction will be positive... The situation does not warrant the declaration of martial law and President Duterte is not doing so,” he said.

Finance Secretary Carlos Dominguez agreed. “We are confident that... the perpetrators of this cowardly act will be swiftly brought to justice,” he said in a statement.

The Abu Sayyaf initially claimed to be behind the attack, but later on denied it. Duterte has ordered a massive military operation against the terrorist group in the south.

Sought for comment, Jonathan Ravelas, chief market strategist at BDO Unibank Inc., said both the peso and the stock markets could take a beating from the incident today.

“Just like any ‘terrorist event,’ there will be some knee-jerk sell-off,” Ravelas said in an e-mail.

The Philippine Stock Exchange index suffered seven-day losses before bouncing back to close 34.11 points or 0.44 percent up to 7,807.42. The peso also closed stronger against the dollar at 46.62.

Donald Dee, honorary chairman of the Philippine Chamber of Commerce and Industry, said investors are likely to “wait and see” how the President’s proclamation will be implemented.

Off hand, he said the government should show that it remains “in control.”