Philippine gov't cuts GDP growth projection for 2021
By Celerina Monte
The Philippine government has slashed its projected economic growth for this year to 6 to 7 percent from 6.5 to 7.5 percent due to the lockdown recently imposed in the National Capital Region and four nearby provinces to prevent further rise in coronavirus disease.
The inter-agency Development Budget Coordination Committee met on Tuesday and reviewed the medium-term macroeconomic assumptions and Fiscal Program for 2021 to 2024.
"For 2021, the emerging Gross Domestic Product (GDP) growth projection is slightly adjusted to 6 to 7 percent from 6.5 to 7.5 percent in view of the emergence of new COVID-19 variants and the reimposition of Enhanced Community Quarantine (ECQ) in the National Capital Region (NCR) Plus area during the second quarter of the year," a joint statement of economic managers read by DBCC head Budget Secretary Wendel Avisado during the virtual press briefing.
The government placed NCR and the provinces of Bulacan, Cavite, Laguna, and Rizal or NCR Plus under lockdown or MECQ on March 29 to April 11 and later under modified ECQ from April 12 to May 14 due to a surge in COVID-19 cases.
The Philippine economy contracted by 9.5 percent in 2020 due to pandemic.
The DBCC expressed optimism that by next year, the GDP growth will return to pre-COVID-19 level by expanding at 7 to 9 percent and will grow by 6 to 7 percent in 2023 and 2024.
National Economic Development Authority Director General Karl Kendrick Chua said the growth projections, particularly this year, are dependent very much on the vaccination program of the government.
Chua expressed belief that there could no longer be "big area lockdown" as the government accelerates its inoculation program with the expected arrival of more vaccines in the country.
He said the "best way" to manage and contain COVID-19 is through localized lockdowns.
Avisado said that the government needs around P170 billion to fund supplemental social support for those hardest hit by pandemic as well as to fund improved health protocols.
The DBCC, meanwhile, maintained the average inflation target for 2021 to 2024 at 2 to 4 percent.
The economic team adjusted the peso-US dollar exchange rate assumption to P48 to 53 for this year until 2024.
As the global economy improves, Avisado said exports are projected to expand to 8 percent by 2021 and 6 percent by 2022.
"Goods imports are also expected to grow by 12 percent this year and 10 percent in 2022 as domestic demand bounces back. For 2023 to 2024, goods exports and imports are projected to grow by 6 percent and 8 percent, respectively," he said.
The DBCC maintained its growth forecast for services exports at 6 percent for 2021 to 2024 while services imports is seen to expand by 7 percent in 2021 and to 8.0 percent for 2022 to 2024.
The economic managers adjusted the government's disbursements for this year from P4.66 trillion to P4.74 trillion, owing mainly to funding requirements to support Bayanihan II, including the procurement of COVID-19 vaccines, among others.
Disbursements are projected to reach P4.95 trillion in 2022, and will further increase to P5.11 trillion in 2023 and P5.40 trillion in 2024, according to Avisado.
The DBCC increased the deficit program for this year to 9.4 percent of GDP and 7.7 percent next year. DMS
