Government spending key to boost domestic growth

Government spending will be the key in ensuring that domestic consumption remains strong amid fears brought by the threat of the coronavirus disease-2019 (Covid-19).
BDO Chief Strategist Jonathan Ravelas said people go out less lately as a preventive measure against the virus.
He, however, said that since Covid-19 cases in the country remain low, people will eventually decide to go out again within the next few months.
In the meantime, the lower spending on malls and restaurants will have an impact on domestic consumption, which, he said, can be countered by stronger spending by the government for its infrastructure program, among others.
“Once we see the government really spending then you will see a big difference. The sentiment will change,” he said.
On Thursday, Philippine monetary officials said they continue to have policy space to implement measures to help boost domestic growth vis-à-vis the impact on the growth of Covid-19.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said they are committed to implementing the 50 basis points reduction in the central bank’s key policy rates as he has indicated before.
He said rate cuts more than what they have projected earlier will depend on the need, thus, the necessity to continue to monitor the situation.
With these statements, Ravelas said the central bank chief stressed monetary officials’ readiness to tap its policy tools to continue to help buoy the economy.
He said a 50 basis point cut in the BSP’s key policy rates this year “is okay” and any reduction more than this should be “saved for the rainy day.”
He cited as an example of government measures to lift domestic consumption the Hong Kong government’s decision to provide HK$10,000 cash handouts to permanent residents as the China special administrative region grapples with the Covid-19 epidemic.
He said the government may implement measures such as free movie tickets to people who spent a certain amount when they go to the mall to entice the public to go out and spend more again. – PNA release