Kuala Lumpur-based Juwai IQI Chief Economist Shan Saeed
MANILA – Consumers are enjoying cheaper fuel prices as trading of crude oil in the world market plunges by 50 percent.
Kuala Lumpur-based Juwai IQI Chief Economist Shan Saeed said even oil prices will pick up in the coming months as some economic activities will resume after the enhanced community quarantine (ECQ), Filipino consumers can keep up with the price hike.
Saeed said the consumers are the “big winners” in the cheaper oil prices as many factories were closed during the quarantine period.
“Filipinos are fully adjusted with (the) deregulated oil price and regulated power price -- but ensuring the profitability of the power generation companies. I would even dare say that most businesses and consumers would tolerate steadily increasing prices, provided that there are businesses and salaries to be made due to steadily normalizing economic activities,” he added in an e-mail to the Philippine News Agency.
He said the Philippine economy will catch up by the second quarter of the year, or once the enhanced community quarantine will be lifted.
Saeed added that companies will also benefit from the lower oil prices as soon as they return to their operations.
He said it is also expected that global oil players in the Philippines will stockpile, but not aggressively given the cheaper oil price in the world market.
World oil prices further plummeted this week as demand remains gloomy due to uncertainties brought by the coronavirus disease 2019 (Covid-19) pandemic.
Earlier, the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) agreed to cut their production by 9.7 million barrels per day for May and June.
Other G20 countries also joined the OPEC+ in slashing oil production, with a total cut of up to 20 million barrels a day starting next month.
West Texas Intermediate crude trades at USD24.65 per barrel while Brent crude sells at USD31.87 a barrel.
“The global economy is heading for a slowdown whereby power pendulum moves from west to east. China is back in the market with a trade surplus by the first quarter of 2020. There are many economies in the Asean which import oil to bolster their economic growth. With the 50-percent drop in oil prices, economies like the Philippines will tend to benefit,” he said.
Saeed further said the country’s macroeconomic stability and the government’s strong balance sheet will help the economy propel after the enhanced community quarantine period.
“Government will continue to pursue maneuvering through fiscal policy and the central bank through monetary policy. We have shared earlier that amalgamation of fiscal and monetary policy can ward off recession,” he added. (PNA)
