MOODY’S ANALYTICS downgraded its growth projection for Philippine gross domestic product (GDP) in 2021 to 4-5%, much lower than official forecasts, citing the lack of fiscal support for the economy and the uncertainty surrounding vaccine acquisition.

In November it issued a forecast of 6.2%. The government’s economic managers officially estimate growth at between 6.5% and 7.5%.

“We have factored in continued modest fiscal stimulus, the continued difficulty in containing COVID-19, the relatively slow pace of acquiring sufficient doses of vaccine, and the modest improvement in exports,” Moody’s Analytics Chief Asia-Pacific Economist Steven Cochrane said in an e-mail to BusinessWorld.

The Philippines’ COVID-19 case count rose by 2,103 on Sunday to 525,618, according to the Department of Health. Active cases are at 27,318.

The government hopes to vaccinate about 50 million people this year and is looking to buy 148 million doses, with the target to start inoculations set for this month.

“The Philippines has not yet secured enough vaccines to cover its entire population and faces obstacles such as logistical challenges and growing doubt about vaccine efficacy,” Moody’s Analytics said in a note on Monday.

The Philippines’ 2021 budget is a P4.5-trillion budget, large parts of which are directed at pandemic containment and economic stimulus. Legislators also extended the validity of the P165-billion second stimulus package, known as Bayanihan II, allowing its funds to be used until the end of June.

On the monetary side, Mr. Cochrane said further easing through a rate cut may not be on the table although a reserve requirement reduction “would be an alternative way of providing some additional stimulus.”

“The Bangko Sentral ng Pilipinas (BSP) is likely out of ammunition, with the policy rate at 2% as inflation trends closer to the top end of its 2% to 4% inflation target,” Moody’s Analytics said.

Inflation was 3.5% in December and likely picked up to 3.6% in January, according to last week’s BusinessWorld poll of 16 analysts. The interest rate environment is effectively in negative territory with the key policy rate currently at 2% after 200 basis points of easing in 2020.

The central bank will hold its first policy-setting meeting for the year on Feb. 11.

Last year, the economy contracted by a record 9.5%, after having grown 6% in 2019. — Luz Wendy T. Noble