Duterte’s economic team cuts 2021 growth forecast anew with return of lockdowns

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Metro Manila (CNN Philippines, August 18) — President Rodrigo Duterte’s economic team slashed anew its growth forecast for 2021, indicating a less rosy picture of the economy’s performance this year.

The Development Budget Coordination Committee on Wednesday announced an economic growth target band of 4-5% for the year, citing the reimposition of tighter lockdowns due to the feared Delta variant driving up COVID-19 cases.

This is the second time the inter-agency body dialed down prospects for 2021, the first in May where they slashed economic goalposts to 6-7% from the initial 6.5-7.5% forecast range.

This came as Metro Manila and select provinces returned to the strictest enhanced community quarantine classification due to the surge in COVID-19 cases said to be driven by the Alpha and Beta variants.

“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 Q2 2021. Without the present spike, the original growth target of 6.0 to 7.0 percent would have been achievable,” said the economic team.

READ: PH out of recession with 11.8% growth in Q2, meeting expectations 

While economic output logged a double-digit growth from April to June, it shrank by 1.3% on a seasonally adjusted basis compared to the first quarter of 2021.

The DBCC retained its target ranges of 7-9% for 2022 and 6-7% for 2023 and 2024.

In a separate statement, the Bangko Sentral ng Pilipinas said the latest revision means the path to a full rebound “remains bumpy.”

The BSP assured it will continue providing the economy support, noting that it has injected more than ₱2.2 trillion into the financial system since the current health crisis began. It has likewise kept key interest rates to a record 2% low since November last year, counting on lower borrowing costs to help jumpstart economic activity. 

“We will continue to do what is needed for as long as necessary — until there is hard evidence of full recovery,” the central bank said.

Both the BSP and economic managers emphasized the importance of ramping up the country’s inoculation to help the economy bounce back.

“We expect that this will significantly reduce the need for wide-scale quarantines, especially in key economic centers where the majority of Filipinos work,” said the DBCC, which is composed of the Department of Finance, the Department of Budget and Management, and the National Economic and Development Authority.

CNN Philippines correspondent Melissa Lopez contributed to this report.