Business

Contagion fears amid coronavirus outbreak seen hurting consumer spending

Contagion fears amid coronavirus outbreak seen hurting consumer spending

MANILA, Philippines — Contagion fears amid the novel coronavirus disease outbreak could hold back consumer spending in the Philippines, analysts at a global bank said Thursday.

Chinese authorities have changed the way they count infections from the SARS-like virus — officially named COVID-19 — and the latest reports propelled the nationwide death toll to 1,355 and the infection count to nearly 60,000.

There are two reported deaths outside the mainland: one in the Philippines and the other in Hong Kong. 

In a report, ANZ Research said that while the impact of the virus on household consumption is difficult to estimate, it’s possible that contagion fears may reduce consumers’ discretionary spending in affected cities, particularly in public spaces such as malls and entertainment venues.

“Therefore, we expect a decline in consumption indicators, such as retail sales, which will be more than merely the impact of lower tourists and the hit to remittances as aforementioned,” ANZ Research said.

Consumer spending has traditionally been the driving force behind growth in the Philippines.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno earlier said the country’s gross domestic product growth could be lower by 0.2 percentage point in the first quarter and by 0.4 percentage point in the second quarter considering China’s contribution to the Philippine economy.

At its first meeting in 2020, the BSP’s Monetary Board cut its benchmark rate by 25 basis points to 3.75% — a move the central bank described as a “preemptive” action against risks to economic growth, including the novel coronavirus fallout. — with a report from AFP