By Beatrice M. Laforga, Reporter
THE Philippine economy may have to grow by at least 10.1% in the remaining three quarters to reach the lower end of the 6.5-7.5% full-year target, the National Economic and Development Authority (NEDA) chief said after gross domestic product (GDP) shrank in the first quarter.
For private economists, this is a “challenging” scenario as the government continues to implement quarantine restrictions to curb the rise in coronavirus infections.
“The economy will need to grow by 10.1% over the next 3 quarters to reach the 6.5% growth for 2021,” NEDA Undersecretary Rosemarie G. Edillon told BusinessWorld in a Viber message on Tuesday.
Socioeconomic Planning Secretary Karl Kendrick T. Chua earlier on Tuesday said the seven-week long lockdown in Metro Manila and adjacent provinces pose a downside risk to the government’s growth targets for 2021, even as the overall impact was likely less as restrictions were slightly eased compared with last year.
“We have eight months to catch up. The Development Budget Coordination Committee (DBCC) will be meeting to re-assess how the first few months of this year’s experience and our program for the rest of the year can support our GDP growth target,” he said during a virtual briefing.
Gross domestic product (GDP) contracted by a bigger-than-expected 4.2% in the first quarter, the fifth straight quarter of decline amid the coronavirus pandemic. This is also the longest recession since the Marcos regime when GDP shrank for nine consecutive quarters from the fourth quarter of 1983 to the fourth quarter of 1985.
The DBCC, which is set to meet later this month, will likely slash growth forecasts for the year because the two-week ECQ at the start of the second quarter alone could shave 0.8 percentage point off the full-year GDP, Mr. Chua previously said.
Mr. Chua said the economic losses from the recent lockdowns could still be recouped in the remaining months of the year if the economy will be safely reopened, ongoing relief programs to be fully implemented and the mass vaccination program fast-tracked.
Despite delays in the arrival of vaccine supplies, the NEDA chief insisted the pace of the vaccination program was consistent with the DBCC’s assumption it will only gain traction by the second half of 2021.
A 10.1% growth rate for the next three quarters will be a “challenge,” according to UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion. Even a no-lockdown scenario and an efficient vaccination program moving forward could only lift the full-year GDP to 6% growth this year, he said.
“Also, more than the forecasts, consumer and business confidence return should be the focus. If not, it will be difficult to achieve even just the lower end of the government’s target,” Mr. Asuncion said in a Viber message on Tuesday.
Security Bank Corp. Chief Economist Robert Dan J. Roces said “a lot will ride on the second half of this year, but gradual recovery is seen for 2021 fraught with uncertainties and downside risks.”
“Momentum may have been sapped with rising cases and resulting lockdowns thus, the challenge right now is to restore business and consumer confidence, and these are functions of a wider vaccination rollout among others,” Mr. Roces added.