Diokno: Shift to MECQ has limited economic impact

The Bangko Sentral ng Pilipinas (BSP) said the reimposition of a stricter lockdown for 15 days would have limited impact on the country’s economy that is being battered by the novel coronavirus disease 2019 or COVID-19 pandemic.

BSP Governor Benjamin Diokno said the pandemic has monumental economic implications, but the return to a modified enhanced community quarantine from general community quarantine in the National Capital Region (NCR) as well as nearby provinces is likely to have limited economic impact.

“This coronavirus pandemic is a public health issue with monumental economic implications,” Diokno said in a tweet.

The BSP chief explained that each individual has a role to play in mitigating the effects of the once in a lifetime health crisis.

“The term public means that each individual has a role to play in mitigating the adverse impact of the crisis on the loss of lives, jobs, and livelihoods,” Diokno added.

Last Sunday, President Duterte approved the imposition of MECQ in Metro Manila, Laguna, Cavite, Rizal, and Bulacan from Aug. 4 to 18 as recommended by members of the Cabinet.

This after the national caseload soared to 103,185 as of Aug. 2 with a an all-time high 5,032 new cases in a single day last Sunday.

“This highlights the inconvenient truth that the solution to this pandemic is not solely the responsibility of the government. It is equally the responsibility of the general public,” Diokno added.

The BSP chief said each individual has a role to play in mitigating the effects of a pandemic.

“This coronavirus pandemic is a public health issue with monumental economic implications,” Diokno added.

The economy ground to a halt and resulted to a gross domestic product (GDP) contraction of 0.2 percent in the first quarter, ending 84 straight

quarters of positive growth, after Malacañang placed Luzon under enhanced community quarantine (ECQ) in the middle of March.

Last week, Diokno said the worst is over for the Philippine economy in terms of gross domestic product (GDP) contraction as the country is moving towards a recovery.

The BSP chief said a 10 to 15 percent GDP contraction from April to June would be tolerable.

“What I can see is if the contraction is single digit, that’s really nice, very nice. If it’s between 10 and 15 (percent) that is still tolerable, but anything that is higher than 20 percent, that could be problematic,” Diokno told reporters via an online press chat last Thursday.

Diokno is expecting a hockey-stick-like recovery for the Philippines with the slow and painful recovery starting the third quarter, paving the way for a very nice Christmas for the country.

The Philippine Statistics Authority (PSA) is set to release the second quarter and first half GDP figures on Thursday.

ING Bank Manila senior economist Nicholas Mapa said COVID-19 continues to act like Kryptonite to a once super-consumption.

“With the economic growth engine crippled, the continued spread of the virus weighs on any hopes of a recovery. Unless the Kryptonite is addressed, no amount of alphabet rearrangements to lockdown measures and relaxing of quarantine protocols will jumpstart the recovery,” Mapa said.

Mapa said the country’s GDP likely contracted by 6.3 percent in the second quarter before improving to a smaller contraction of 5.8 percent in the third, and 3.5 percent in the fourth quarter.

The Dutch financial giant is looking at a GDP growth of about five percent next year.

The Development Budget Coordination Committee (DBCC) is looking at a strong rebound with a GDP growth of eight to nine percent in 2021 after a contraction of two to 3.4 percent this year.

Lawrence Agcaoili (The Philippine Star )

Source: Peso Economics