The interagency Development Budget Coordination Committee (DBCC) expects a deeper contraction of the Philippine economy this year as it took into consideration the prolonged coronavirus disease 2019 (Covid-19) pandemic-related lockdowns in the country.
“The emerging gross domestic product (GDP) growth rate assumption for 2020 has been adjusted to -8.5 to -9.5 percent following the prolonged imposition of community quarantines in various regions in the country,” Budget Secretary Wendel Avisado said during a briefing after the 178th DBCC meeting on Thursday.
The latest projection is wider than the panel’s previous estimate of -4.5 to -6.6 percent in July.
The country has been under lockdown since mid-March, forcing most Filipinos to stay home to avoid infection and many business to suspend operations, especially in the first few months.
As a result, domestic output slid by 0.7 percent in the first quarter, a record 16.9 percent in the second — when Metro Manila and other parts of the country were under enhanced community quarantine — and 11.5 percent in the third. This kept the country in a recession and brought the contraction in GDP to 10 percent in the first nine months of 2020.
Despite the revised forecast, Avisado said the country’s economic managers also expected GDP numbers in the fourth quarter to improve.
“As we carefully and proactively manage the risks, a strong economic recovery and solid growth remains within our reach,” he added.
Acting Socioeconomic Planning Secretary Karl Kendrick Chua said available data suggested that October-to-December GDP might be 0.62 percentage points lower and the full-year economic figure might be -0.17 percentage points lower because of the La Niña phenomenon, the African swine flu and the four typhoons that hit the country in the last two months.
On the DBCC’s macroeconomic assumptions and targets for 2021 and 2022, Avisado said they took into consideration recent positive developments that would help propel the economy to a strong recovery starting next year.
These “include our gradual recovery, the better-than-expected performance of the main revenue collection agencies, improvements in the employment situation compared to the peak of community quarantine restrictions, and the likely passage of key economic recovery bills,” he added.
The Budget chief also said economic managers expected better economic outcomes next year as the economy gradually moves toward full reopening.
“Despite a lower projection than what was initially adopted back in July 2020, further relaxation of restrictions, as we have improved our healthcare system capacity, will keep our economy on the right track towards full recovery,” he added.
Thus, GDP growth is projected to bounce back and reach 6.5 to 7.5 percent in 2021 and 8 to 10 percent in 2022. This compares to the DBCC’s earlier outlook of 6.5 to 7.7 percent growth for both years.