Philippine Economy to Grow 6% Under Worst Scenario, Diokno Says

(Bloomberg) -- The Philippine economy will expand about 6% 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%,” 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.

Here are other comments by the governor:

• The country has ample fiscal and monetary space.
• Debt-to-gross domestic product ratio is low and falling, inflation is muted and within the target range.
• The peso is steady, supported by hefty reserves.
• The banking industry is sound and adequately capitalized.

To contact the reporter on this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net

To contact the editors responsible for this story: Tomoko Yamazaki at tyamazaki@bloomberg.net, ;Shamim Adam at sadam2@bloomberg.net, Naoto Hosoda, Stanley James

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