“Earlier this week we cut our 2020 GDP growth forecast for the Philippines from six percent to 4.5 percent. The latest announcement means an even bigger slowdown is now likely. It also increases the chances of further policy easing.”
STAR/ File
Growth outlook further slashed to 4.5%
Czeriza Valencia (The Philippine Star) - March 14, 2020 - 12:00am

MANILA, Philippines — Economic growth may slow down to 4.5 percent or lower this year as the Metro Manila-wide community quarantine can be expected to dampen economic activity, said London-based think tank Capital Economics.

The research firm said this will also prompt the Bangko Sentral ng Pilipinas to slash policy rates by as much as 50 basis points in its policy meeting next week.

“The new restrictions on economic activity in Manila will further weigh on the country’s outlook,” Capital Economics said.

“Earlier this week we cut our 2020 GDP growth forecast for the Philippines from six percent to 4.5 percent. The latest announcement means an even bigger slowdown is now likely. It also increases the chances of further policy easing.”

President Duterte announced on Thursday that the entire National Capital Region, a sprawling metropolis of 16 cities populated by 12 million people, will be locked down for 30 days beginning March 15 until April 14.

All domestic land, sea, and air travel to and from Manila will be suspended in an effort to arrest the local transmission of the 2019 coronavirus disease (COVID-19).

Community quarantine measures will also be enforced such as the suspension of classes, ban on mass gatherings and social distancing on mass transport.

Capital Economics noted that compared with the city-wide lockdowns implemented in other countries, the Metro Manila lockdown will be “far less draconian” as continuation of economic activity is encouraged.

This means manufacturing and retail establishments will remain open, public transportation will be operational and people will be allowed to continue their work in the city.

“As such, many industries, including the important business process outsourcing (BPO) sector should be able to function broadly as normal,” said Capital Economics.

The firm noted, however, that the restrictions in Metro Manila will further weaken consumption which accounts for 70 percent of the economy as people avoid public places.

“Investment plans are also likely to be put on hold,” said Capital Economics.

The already suffering tourism industry, which is now counting on domestic tourism, will also be dealt with another blow as movement of people will be restricted.

ECONOMIC GROWTH RODRIGO ROA DUTERTE
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