IMPACT OF VIRUS ‘BROADER, LONGER’
People line up to buy face masks to protect themselves from the new coronavirus in front of Seoul Railway Station in Seoul, South Korea, on Tuesday, March 3, 2020. China’s coronavirus caseload continued to wane on Tuesday even as the epidemic took a firmer hold beyond Asia. Hong Hae-in/Yonhap via AP
By Cai U. Ordinario
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@caiordinario
HE worst is yet to come with regard to the impact of the coronavirus disease 2019 (Covid-19) as international think tank Oxford Economics expects the virus will have a “larger, broader and more long-lasting” infection on the global economy. In a research brief, Oxford Economics Global Macro Research Director Ben May said global GDP is now projected to be weaker than its initial estimate of 2.3 percent. May said China’s GDP growth forecast will also be slower at 2.3 percent in the first quarter compared to
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Oxford Economics’ initial estimate of 3.8 percent during the period. “Developments over the past couple of weeks suggest that the economic disruption from coronavirus’ spread will be larger, broader and more longlasting than we previously envisaged,” May said in Oxford Economics first weekly Coronavirus Watch brief. The think tank said the slowdown may be evident in the latest data on the global manufacturing purchasing managers’ index (PMI) which fell sharply to 47.2 from 50.4 in February. This may have been largely due to the slowdown in China’s official manufacturing PMI which hit a record low of 35.7 in February. Elsewhere in Asia,
Wednesday, March 4, 2020 Vol. 15 No. 146
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‘Wider budget deficit financed PHL growth’ 3.55% T By Bernadette D. Nicolas
@BNicolasBM
HE Department of Finance (DOF) said a deficit-to-GDP ratio that is higher than the government’s target for 2019 will not harm the Philippines’s credit rating, particularly since additional funds were used to pump prime the economy.
In an economic bulletin on Tuesday, Finance Undersecretary Gil Beltran said last year’s budget deficit, which was equivalent to 3.55 percent of GDP, was “financeable”
due to the reduction in domestic interest rates and the national government’s debt ratios. Official government data indicated that the budget deficit of 3.55
percent of GDP in 2019 exceeded the administration’s target of 3.25 percent of GDP by 0.3 percentage point. The deficit-to-GDP ratio last year was also up from 3.2 percent
Percentage of GDP represented by the budget deficit in 2019. This exceeded the administration’s target of 3.25 percent of GDP. The deficit-toGDP ratio last year was also up from 3.2 percent in 2018
in 2018. “The rise in the NG [national government] deficit beyond the government target should not adversely affect the country’s credit rating as fiscal stimulus was needed to shore up the country’s growth Continued on A2
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turns should a sharp rise in the number of cases occur. According to Fitch Solutions, this would ultimately result in reduced domestic activity and hamper the tourism sector further. Aside from lower domestic activity, Fitch Solutions also flagged lower exports and tighter global financial conditions as downside risks from the ongoing global health crisis. “We had seen downside risks to growth given the expectation of lower growth in China, but with the outbreak beginning to have a global impact and proving disruptive to supply chains across continents, we see the external shock to the Philippines as more pronounced. Investors have also grown more concerned about the potential impact of the outbreak on the Philippine economy, as reflected by the Philippine Stock Exchange [PSE See “Fitch,” A2
South Korea, Philippines
Oxford Economics also said recent survey data from South Korea such as its Business Sentiment Index, point to a slowdown in consumer confidence. “Not only did Korea’s Business Sentiment Index record a plunge in February, the survey was conducted before the recent major spike in COVID-19 cases there, implying that further sharp declines may be to come. Consumer sentiment also dropped sharply but remained above the 2019 lows,” May said. See “Virus,” A2
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HOUSE VOWS TO PASS RETAIL LIB AMENDMENTS BEFORE SESSION BREAK By Elijah Felice E. Rosales
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@alyasjah
HE House of Representatives will pass the amendments to the Retail Trade Liberalization Act before Congress goes on recess next week to give senators enough time to deliberate on their version of the bill, a House leader vowed on Tuesday. Valenzuela City Rep. Weslie T. Gatchalian committed the chamber’s passage of House Bill (HB) 59 before Congress takes a break next week. He argued it is crucial that the measure is relayed to the Senate the soonest to allow its members to finalize their position on the bill. HB 59, authored by Tarlac Rep. Victor A. Yap, will trim the required capital for foreign
Covid-19 prompts Fitch to cut growth forecast
NTERNATIONAL think tank Fitch Solutions has cut its growth forecast of the Philippine economy for 2020, as the coronavirus disease (Covid-19) is likely to affect four of the country’s main economic streams. Fitch Solutions—the research arm of Fitch Group—said in an announcement on Tuesday that it has lowered its projection for Philippine economic growth to 6 percent, down from the earlier forecast of 6.3 percent. “We expect the Covid-19 outbreak to weigh on growth in the first half of 2020. As such, we have lowered our 2020 growth forecast [...] to account for growing external headwinds, noting that risks to our forecast are weighted to the downside should the virus spread more aggressively,” the research group said in a statement. This projection, the group noted, is still subject to potential down-
May said, manufacturing PMIs have also declined.
retailers to operate in the Philippines to $200,000, from $2.5 million at present. “We have until March 15— March 11 is our last session day—to, hopefully, pass this into third reading. By the time that we resume [session] in May, it will be in the Senate,” Gatchalian told the BusinessMirror on the sidelines of a forum with European investors. For Gatchalian, who chairs the House Committee on Trade and Industry, it is important that HB 59 be legislated before the recess to provide senators ample time to assess the bill, especially since their version proposes a different and higher paid-up capital. Whereas under the House bill the capital requirement is See “Lib amendments,” A2
Virus cuts BOC’s take from imports in February
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WILDLIFE ALERT Dr. Glenn Maguad, officer in charge of the DENR Wildlife Rescue Center, demonstrates the new system that can help the facility respond better to cases of rescued wildlife at the ceremonial turnover marking World Wildlife Day. The filtering app, called “WildALERT,” helps frontliners, forest rangers and police identify wildlife species and submit tips/reports. The DENR received assistance from the United States Agency for International Development in developing the digital tool (inset). Related story on efforts to track “dirty money” in the illegal wildlife trade on page A8. NONOY LACZA/Inset image by PNA
HE Bureau of Customs (BOC) lost some P2.7 billion in tariff collection in February, as the outbreak of the coronavirus disease 2019 (COVID-19) caused imports from China alone to drop by an annualized rate of 34.67 percent in terms of volume. The latest data from the BOC obtained by the BusinessMirror showed that revenues from shipments from China fell by 27.41 percent to P7.17 billion in February, from last year’s P9.88 billion. Volume was also lower at 936.25 million kilograms, from last year’s 1.43 billion kg. The decline in revenues from China’s shipments to the Philippines pulled down the BOC’s total collection from imports last month. The bureau collected a total of P41.67 billion, 2.58 See “BOC,” A2
US 50.8560 n japan 0.4696 n UK 64.8617 n HK 6.5371 n CHINA 7.3048 n singapore 36.5923 n australia 33.2547 n EU 56.6332 n SAUDI ARABIA 13.5572
Source: BSP (3 March 2020)