Listed lender Security Bank Corp.’s Trust Asset Management Group is seeing a strong potential for the economy to bounce back from the negative effects of the COVID-19 pandemic.
“During the 1997 Asian Financial Crisis and the 2008 Global Financial Crisis, inflation played a large part into the crash that ultimately bled into consumption,” Noel Reyes, chief investment officer at Security Bank’s Trust and Asset Management Group, said in a statement.
“However, for COVID-19, it was the decline in consumption and business closures, because of lockdowns that bled into the financial system which in return led us to negative GDP growth territory,” Reyes said.
The Philippines nosedived into recession in the first half of the year after the country’s gross domestic product (GDP) contracted by 16.5%, the worst on record in nearly three decades.
The Philippine economy was in a standstill during the latter part of the first quarter due to the implementation of strict quarantine measures — enhanced community quarantine (ECQ) in Metro Manila and other high-risk areas from March 17 to May 15, followed by a modified enhanced community quarantine (MECQ) until May 31.
With this, Security Bank’s Trust Asset Management Group said it forecasts a -7.7% year-end GDP forecast for the economy.
“This can be attributed to the fact that most Filipinos will continue to stay at home, only spend on essentials, and still refrain from purchasing non-essential items,’ Reyes said.
Despite this, the bank remains very optimistic that the country’s GDP will still settle at 3.5% year-on-year growth by 2021 due to base effects and the GDP returning to pre-COVID figures at 6% by 2023.
“The good liquidity brought by the forceful response of the Bangko Sentral ng Pilipinas and low interest rates put the country in a good position for consumption rebound,” Reyes said.
Echoing the group’s economic view, Security Bank’s president and CEO Sanjiv Vohra said that consumer confidence can be seen returning once a vaccine or cure that could end the pandemic is found.
“It’s a delicate balancing act for sure, and the key will be to strengthen our public health so that we make sure that our workforce and thereby our economy will remain productive, and business and consumer confidence returns,” Vohra said.
“Locally, we have low-interest rates and good liquidity. We also have a forceful BSP response, resilient currency, and a strong potential for economic and consumption rebound,” he added.—AOL, GMA News
This article Security Bank’s investment group sees strong consumption rebound post COVID-19 was originally published in GMA News Online.