Banks on Monday voiced their support for the implementation of “vaccine bubbles” to encourage more businesses to open up further.
Bankers Association of the Philippines (BAP) president Jose Arnulfo A. Veloso said allowing fully-vaccinated individuals will naturally increase mobility of consumers.
“With more than 50 percent of the population vaccinated in the metropolitan and adjacent areas where most business activities are situated, spurring economic activity can be best achieved,” said Veloso in a statement on Monday.
He also said the “mobility of fully vaccinated Filipinos will encourage spending on various goods and services including in tourism, hospitality, and transport industries that are among those hit the hardest by this ongoing COVID-19 pandemic.”
“Domestic consumption is a good first step in the road towards the country’s recovery. Our fellow Filipinos protected by the vaccine are key to surpassing this health crisis,” added Veloso.
Based on the latest Bangko Sentral ng Pilipinas (BSP) Business Expectations Survey and the Consumers Expectations Survey, business sentiments are deteriorating while consumer outlook is improving.
Businesses have turned pessimistic with the reimposition of stricter lockdowns while consumers’ sentiment is “less pessimistic” because jobs have continued despite mobility restrictions.
Both businesses and consumers expect a weaker peso and higher peso borrowing rates as well as inflation rate for the fourth quarter 2021 and in the next 12 months.
In the meantime, banks want more confident borrowers to start availing of fresh loans to fund businesses and other personal needs, and this will only be achieved if mobility restrictions are lifted.
Bank lending has declined for the last eight months. In July, bank lending has dropped by 0.7 percent year-on-year
Even as a new wave of COVID-19 infections continued to subdue market sentiment resulting to low credit demand, the financial system’s money supply or domestic liquidity still grew by 5.9 percent year-on-year to P14.374 trillion but it was a slower pace of growth versus the 6.5-percent expansion in June.
Credit activity has remained weak due to risk aversion and weak economic sentiment.