ECONOMIC MANAGERS now expect full-year gross domestic product (GDP) to settle at the low end of its forecast range, as the return to a strict lockdown for two weeks in August slowed the economic recovery.
“For the entire year, we project our economy to contract by about 6%. We have seen unemployment spike when the domestic economy was hindered by the lockdown. Our enterprises have borne the brunt of the economic downturn,” Finance Secretary Carlos G. Dominguez III said in an online forum on Tuesday.
The Development Budget Coordination Committee (DBCC) in July said it expects GDP to contract by 4.4% to 6.6%, or an average of 5.5% this year.
In a Viber message on Tuesday, Socioeconomic Planning Acting Secretary Karl Kendrick T. Chua said the economic team will revisit the macroeconomic assumptions after the release of third-quarter GDP data on Nov. 10.
Mr. Chua previously said the decline in third-quarter GDP is expected to be softer than the record 16.5% contraction in the second quarter. For the first half, the economy shrank by 9% as nearly all economic activity was halted during the strict lockdown from mid-March to end-May.
The World Bank slashed its Philippine GDP forecast for this year to -6.9% (from -1.9%) , while the Asian Development Bank and the International Monetary Fund also cut their projections to -7.3% (from -3.8%) and -8.3% (from 3.6%), respectively.
“Next year, we expect the Philippine economy to post a strong rebound. The challenges are large, but we are determined to build back a better economy that the Filipino people deserve,” Mr. Dominguez said.
The government projects 6.5-7.5% GDP growth in 2021.
Mr. Dominguez stressed the need to further relax restrictions and revive consumer confidence, while maintaining health safety standards to help the economy recover faster.
“We cannot completely lock ourselves up to avoid COVID-19 at the expense of other vital dimensions of our lives… While strengthening our health system, we also intend to continue finding more ways to help revive the domestic economy. We are turning this crisis into an opportunity to boost the competitiveness of our manufacturing and agriculture sector, support the rehabilitation of our tourism infrastructure and facilities, [and] accelerate digital transformation of our government processes to drastically cut red tape, hasten the delivery of services to the people, and curb corruption,” he said.
Mr. Dominguez said the timely passage of the proposed P4.5-trillion budget for next year will also be crucial for economic recovery.
The government is also considering tapping multilateral partners such as the World Bank and the Asian Development Bank (ADB) to raise funds for the purchase of coronavirus disease 2019 (COVID-19) vaccines once it is available.
Meanwhile, Mr. Dominguez said external risks that may arise from the worsening coronavirus outbreak in the United States and Europe will still not have a huge impact on the Philippine’s recovery prospects as its biggest trading partner, China, is still growing.
“Our trade with China is around $50 billion a year and that is double what it is of the US and Japan separately. So demand in China is going to pick up. It’s going to buy our products and that is good news for us. So I guess you know, it’s not rainbows outside there, but at least within our neighborhood, we are okay,” he said.
China’s GDP rose by 4.9% year on year in the third quarter, showing signs of a steady recovery after it has largely controlled the coronavirus outbreak in the country.
On the other hand, restrictions are being tightened once again in some parts of Europe to curb the second wave of coronavirus infections, while the United States continues to have the most number of confirmed cases at over eight million. — Beatrice M. Laforga