By Atty. Junie Go-Soco | Published: November 24, 2020
“Choose to be optimistic. It feels better.” Dalai Lama.
Dalai Lama is a title given by the Tibetan people to the foremost spiritual leader of the “Yellow Hat” school of Tibetan Buddhism, the newest of the classical Tibetan Buddhism schools. The 14th and current Dalai Lama is Tenzin Gyatso, who lives as a refugee in India.
The Dalai Lama is a recipient of the Nobel Peace Prize awarded in 1989 and the US Congressional Gold Medal in 2006.
The Climb Is Steep
In this issue, this column continues its focus on the country’s economic recovery. It makes a pitch to approach the recovery from an optimistic perspective, even when it is increasingly clear that the road to recovery will be a steep climb.
Consider the recent assessment from the debt watcher Moody’s Analytics.
It says that it will likely take the Philippines up to the end of President Rodrigo Duterte’s term in 2022 to revert to economic growth levels before the pandemic.
It further observes that the country was hit hard by the pandemic’s economic impacts and had to climb out of a deep hole.
Not Until Q3 2022
In particular, Moody’s projects the country’s gross domestic product (GDP) to return to 2019 levels by the third quarter of 2022.
It also points out that “hard-hit economies like the Philippines have only modest fiscal packages” to fight COVID-19.
On this aspect, the Manila-based Asian Development Bank’s (ADB) estimates that as of November 2, 2020, the country’s total package of measures to address the health and socioeconomic crises inflicted by the COVID-19 pandemic amounted to $21.45 billion or 5.83 percent of GDP.
Onto Negative Territory
However, Moody’s cites green shoots of recovery in the Philippines as lockdowns ease, and economies gradually open up.
On the bright side, the Philippines posted 2.2-percent exports growth in September, cutting six consecutive months of year-on-year decline.
To the surprise of many observers, but entirely in line with previous pronouncements, the central bank recently cut its key interest rate by a quarter of a percentage point. This move drove yields deeper into “negative territory.”
It also announced that the Philippine economy needs more support and consumers need more confidence after a slow third-quarter growth.
Speeding Up Spending
The Monetary Board’s (MB) decision to cut the interest rate on the BSP’s overnight reverse repurchase facility by 25 basis points brought the key rate, on which banks base lending rates, to 2 percent effective November 20.
The MB also reduced interest rates on overnight deposits to 1.5 percent and lending facilities to 2.5 percent.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said that the prevailing low inflation rate also gave enough room to release more liquidity into the financial system, a move that will speed up spending.
Best Finish, So Far
On the Philippine stock market performance, the local stock barometer returned to the 7,000 level on November 18.
This achievement marked its best finish in nine months, as investors favorably responded to favorable news about coronavirus vaccine development.
This movement strongly suggests that investors are, indeed, starting to gain confidence that the pandemic will end soon.
While the monetary aspect of the economy is improving, institutional obstacles are blocking the road to recovery.
Prominent among these obstacles is the recently noted problem in the processing and release of funds to loan applications of some 26,000 micro, small and medium businesses about eight months after many establishments in the country suspended operations due to the COVID-19 pandemic.
Although as of mid-November, the DTI has already approved 1,660 loans for micro, small and medium businesses, amounting to a total of P1.2 billion.
DTI also announced that as of mid-November, 5 percent of the Philippines’ establishments have yet to reopen.
Everything’s Gonna Be Alright
Even in these difficult times, as noted earlier, there are strong reasons to be optimistic.
Here are two quotes that can perk up your day.
“Keep looking up….That’s the secret of life.” Snoopy. He is an anthropomorphic beagle in the comic strip Peanuts by Charles M. Schulz.
“Everything’s gonna be alright.” Bob Marley. Robert Nesta Marley was a Jamaican singer, songwriter, and musician. He is considered one of the pioneers of reggae.