Growth targets for 2021 may be slashed anew

Finance Secretary Carlos G. Dominguez III–DOF photo

President Duterte’s economic team is scheduled to revisit on Wednesday this year’s growth target and other macroeconomic assumptions in light of the serious threat to recovery posed by the more contagious COVID-19 strains.

Finance Secretary Carlos Dominguez III told reporters on Tuesday that the Cabinet-level Development Budget Coordination Committee (DBCC) meeting would “determine what the future seems to look like, given this lockdown episode we had.” In May, the DBCC scaled down its 2021 gross domestic product (GDP) growth target to 6 to 7 percent from 6.5 to 7.5 percent following the extended recession up to the first quarter.

While the second quarter reverted to year-on-year GDP growth, the Delta strain forced renewed lockdowns this month, including the ongoing 15-day enhanced community quarantine (ECQ) in Metro Manila.

“We are facing a crisis unlike any other we have faced before. We have a virus that is mutating,” Dominguez said.

The Finance chief said the economy’s first line of defense would be the ramped-up mass vaccination and additional investments in the healthcare sector, which would be financed with revenue gains from the tax reform.

“Our vaccination program is proceeding as announced. We have received about 42.6 million vaccines so far, from March to Aug. 15. And we have already administered 27.8 million doses,” he said.

Vaccination, health care

“We have also been investing heavily in our health care —that seems to be the only logical way we can approach this now. The government is doing everything it can. Fortunately, we passed the tax reform bills early, which were meant to reduce poverty, and to [generate] money for investment in infrastructure. And that has been a very good buffer for us—had we not done that, I do not know where we would be now financially,” he added.

In a separate report, state planning agency National Economic and Development Authority (Neda) said that “although the ECQ imposition may temporarily impact employment outcomes in August, the government was determined to maximize this period to accelerate vaccination in high-risk areas in order to safely resume economic activities and restore jobs.”

Production, job losses

Neda had estimated these ongoing stricter quarantine measures would slash P151 billion from production output each week.

In turn, 600,000 Filipinos would temporarily lose their jobs, jacking up poverty incidence by 250,000 people.

The Neda said jobs recovery would remain limited sans drastic relaxation in quarantine measures, especially in Metro Manila.

“With the emergence of the COVID-19 Delta variant, the government has prioritized arresting the spread of this more contagious virus through more proactive quarantines in high-risk areas and an accelerated vaccination program. These actions are crucial in ensuring that economic gains in recent months will resume once we have addressed this current threat,” Neda said. INQ