Security Bank’s Trust Asset Management Group expects the Philippine economy to rebound to pre-pandemic levels in three years after a possible contraction of 7.7% by year-end.

The bank unit said the country’s gross domestic product (GDP) may return to 6% by 2023 as the central bank keeps policy rates low.

“The good liquidity brought by the forceful response of the Bangko Sentral ng Pilipinas (BSP) and low interest rates put the country in a good position for consumption rebound,” Noel Reyes, the bank’s group chief investment officer, said in a statement on Friday.

The overnight reverse repurchase, lending, and deposit rates are at record lows of 2.25%, 2.75%, and 1.75%, respectively.

The central bank has also slashed reserve requirements by 200 bps to 12% for big banks and by 100 bps for thrift and rural banks to 3% and 2%, respectively.

Security bank’s asset managers see growth of 3.5% year on year in 2021 as industries slowly recoup losses from the impact of the coronavirus disease 2019 (COVID-19) pandemic.

For this year, its trust and management group expects GDP to shrink by 7.7% as households cut their budgets and businesses slow their operations.

“This can be attributed to the fact that most Filipinos will continue to stay at home, only spend on essentials, and still refrain from purchasing non-essential items,” the group said.

Their projection is a bigger contraction than the recent rates from the government and some analysts.

The Development Budget Coordination Committee announced a downgraded GDP projection of -5.5%.

ASEAN+3 Macroeconomic Research Office also cut its 2020 GDP projection for the Philippines to -6.6%.

With an P18-trillion economy, the Philippines lost around P1.5 trillion for every month of strict lockdown in the second quarter, Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said in an online briefing.

Security Bank President and CEO Sanjiv Vohra said the health sector should be further improved to boost the economy to pre-COVID-19 levels.

“It’s a delicate balancing act for sure, and the key will be to strengthen our public health so that we make sure that our workforce and thereby our economy will remain productive, and business and consumer confidence returns,” Mr. Vohra said in a statement.

Economic managers recently slashed growth projections for 2021 and 2022 to 6.5-7.5%. They earlier forecast 8-9% growth for 2021, and 6-7% growth for 2022. — Kathryn Kristina T. Jose