Covid-19: Duterte expands lockdown to Luzon island

Bloomberg

Philippines President Rodrigo Duterte on Monday widened a month-long lockdown in the capital region to cover the entire Luzon island to prevent an outbreak of the new coronavirus, his spokesman said.
An “enhanced community quarantine” of the island with a population of more than 57 million people will be implemented immediately, his spokesman Salvador Panelo said in a short statement. The entire Luzon will be on a strict home quarantine that the police and military will oversee, he said. Public transportation will be suspended and food and basic necessities will be regulated.
The move to contain the virus, which has infected at least 140 people in the Philippines and killed a dozen, will come at a cost to an economy that draws more than 70% of its output from the main island of Luzon which includes the capital region. Bangko Sentral ng Pilipinas will consider a deeper policy rate cut of 50 basis points at its March 19 meeting, Governor Benjamin Diokno said after the expanded quarantine was announced.
“It’s like slamming the breaks on the economy,” said Nicky Franco, head of research at Abacus Securities Corp. in Manila. Duterte’s move will further damp economic activity and markets, he said, forecasting a further slump in the main stock index to as low as 4,500.
The Philippine Stock Exchange index shed a further 7.9% to 5,335.37 at close.

GDP growth this quarter may slip to 5% year-on-year and slow to 5.4% for the entire 2020, said Carlo Asuncion, an economist at Union Bank of the Philippines. That forecast may have to be revised again “because everything is very fluid and uncertain,” Asuncion said.
The Philippine Stock Exchange index shed a further 7.9% to 5,335.37 at close, before Duterte’s latest announcement while the peso extended its decline against the dollar for the fourth straight session.
“Growth will likely take a hit, that much is certain,” said Howie Lee, economist at Oversea-Chinese Banking Corp. Ltd. in Singapore. “But BSP still has a lot of monetary policy room and the consolation is that the Philippines has a lower reliance on exports than other regional peers. An aggressive monetary policy is expected this week to partially offset the effects from this quarantine of Luzon,” Lee said.