2021 GDP growth goal further slashed to 4 to 5 percent

MANILA, Philippines—With the health challenges posed by more contagious variants of SARS Cov2, the virus that causes COVID-19, and their impact on the economy, President Rodrigo Duterte’s economic team has further slashed projected gross domestic product (GDP) growth in 2021 to 4 to 5 percent.

Following average GDP expansion of 3.95 percent in the first six months of 2021, the economy needed to grow by between 4.05 percent and 6.05 percent during the second half to hit the full-year target, even as the Delta and Lambda variants may keep parts of the country on stricter quarantine restrictions, which, in turn, will reduce economic output and shed jobs.

The updated growth goal was another downgrade from 6 to 7 percent set in May, as the pandemic-induced recession spilled over to the first quarter of 2021.

In 2020, economic managers targeted 6.5 to 7.5 percent growth for 2021 after GDP shrank by a record 9.6 percent— the Philippines’ worst annual recession post-war—in 2020.

“In the first half of 2021, our careful balancing of COVID-19 and non-COVID-19 risks allowed us to improve GDP growth to 11.8 percent in the second quarter,” said the Cabinet-level Development Budget Coordination Committee (DBCC) in a statement after a meeting on Wednesday (Aug. 18).

“However, with the global emergence of the Delta variant, the second-half growth outlook was revised downwards to reflect the additional restrictions imposed by the government, which are necessary to curb its spread,” the DBCC said.

This month, Metro Manila and the provinces of Bataan and Laguna reverted to two weeks of the most stringent enhanced community quarantine (ECQ).

“Our strategy is to continue managing the risks carefully by imposing granular quarantines, while allowing a vast number of people to earn a living. We will continue to use this period to accelerate the roll-out of the vaccination program,” the DBCC said.

The economic team said that as of mid-August, 27.8 million vaccine doses had been administered, with 12.6 million Filipinos fully vaccinated with two doses. The economic managers added that daily vaccinations averaged over 475,000 last week following a single-day high of 710,482 last Aug. 5.

“At this rate, and with recent vaccine deliveries arriving as scheduled, we are confident that we can inoculate the required number of individuals, particularly in the densely populated areas, by the end of 2021,” the DBCC said. The government wanted to vaccinate all adult Filipinos this year.

For the DBCC, ramping-up mass vaccination “will significantly reduce the need for wide-scale quarantines, especially in key economic centers where the majority of Filipinos work.”

Amid these, the DBCC kept the GDP growth targets for 2022 and 2023 at 7 to 9 percent and 6 to 7 percent.

TSB