NEDA: Philippine economy could be lower than 6.5% to 7.5% outlook this year

The current economic forecasts of the Development Budget Coordination Committee (DBCC) may be missed due to the continued imposition of community quarantines as COVID-19 cases continue to rise, an official said Monday.

According to Socioeconomic Planning Secretary Karl Kendrick Chua, economic growth may be weaker than the DBCC's current estimate of 6.5% to 7.5% for 2021.

"The recent imposition of ECQ and MECQ may lower our growth estimate, but we are still early in the year and there is ample opportunity to catch up," he said during the Sulong Pilipinas 2021 Pre-SONA Economic and Infrastructure Forum done virtually on Monday.

The NCR Plus bubble -- Metro Manila Cavite, Laguna, Rizal, and Bulacan -- was placed under the modified enhanced community quarantine (MECQ) from April 12 until April 30.

This is one notch looser than the enhanced community quarantine (ECQ) which was imposed in the bubble starting March 29. It was set to last only until April 4, but was extended for another week until April 11.

Should the Philippines miss the current forecast, it will be the second consecutive year that the country will fall short of the DBCC outlook after the economy shrank by 9.6% in 2020 versus the assumption of -8.5% to -9.5%.

For 2019, the gross domestic product (GDP) was initially announced at 5.9%, short of the downward-revised goal of 6.0% to 6.5%. This was later revised to 6.0% to fall within the lower range of the target.

According to Chua, the Philippine economy is expected to return to pre-pandemic levels in 2022, as prospects are "encouraging." He noted that three growth drivers are needed for this to come to fruition -- the reopening of the economy at the appropriate time, the timely implementation of the recovery package, and a strong vaccination rollout.

"We would achieve pre-pandemic levels in 2022, middle of 2022, and all of these are needed to prevent long-term scarring and productivity losses," he explained.

The recovery package includes the 2021 general appropriations act (GAA), the extension of the 2020 budget and the Bayanihan to Recover As One Act, the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law, the Financial Institutions Strategic Transfer (FIST) Act, and the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Act.

Earlier this month, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the DBCC will likely lower its GDP target to 6.0% to 7.0%. — RSJ, GMA News