PH GDP to grow 6% under worst scenario – Diokno

Published March 15, 2020, 12:00 AM

by manilabulletin_admin

The Philippine economy will expand about 6 percent under the worst scenario of the coronavirus pandemic, the central bank governor said, pledging to use all tools needed to address risks to growth and financial markets.

“Even under the worst possible scenario, the Philippines can still grow this year and in the medium term by about 6 percent,” Governor Benjamin Diokno said in a mobile-phone message late Friday.

Bangko Sentral ng Pilipinas, which regulates lenders, has granted temporary rediscounting relief measures to financial institutions affected by the outbreak, Diokno said.

Central banks all over the world are stepping up to contain the fear brought about by the rapidly spreading virus, as currencies and stocks plunged this week. Bangko Sentral ng Pilipinas will deliver another 25 basis point interest-rate cut next week, according to Bloomberg Economics, joining the global wave of easing.

There has been an unusually heavy withdrawal of cash from the central bank by some lenders, and this irrational behavior, similar to consumers hoarding goods, is based on fear and not fact, he said.

Meantime, Diokno said in a statement that BSP is ready to deploy any or all of its policy tools even as it said the fast-spreading coronavirus would not severely cut the country’s growth momentum.

The central bank is widely expected to cut interest rates at its meeting on Thursday and economists believe it will likely ease policy further to cushion the blow of the coronavirus on one of Asia’s fastest growing economy.

“The Monetary Board is ready to deploy any or all its policy tools, as appropriate, to address all challenges to our own financial markers and growth prospects,” central bank Governor said in a statement.

The Duterte administration targets an economic growth of 6.5 percent to 7.5 percent this year, but government officials had said the coronavirus outbreak could trim it down to 5.5 percent to 6.5 percent.

The central bank lowered the rate on its overnight reverse repurchase facility by 25 basis points to 3.75 percent in February, the fourth such move since it began reversing policy rate hikes in 2018 to bolster the economy. (Bloomberg with Reuters)