2021 GDP forecast faces downgrade

Quarantine measures in NCR Plus seen taking toll on economy

The Interagency Development Budget Coordination Committee (DBCC) might revise downward the country’s gross domestic product (GDP) growth forecast for this year to take into account the impact of the more stringent quarantine measures imposed in the National Capital Region (NCR) and surrounding provinces, collectively known as “NCR Plus.”

An area along Langit Road, Bagong Silang-Kanan, Caloocan City that used to be crowded is empty of people on April 11, 2021 as curfew hours in Metro Manila were shortened to 8 p.m. to 5 a.m. Due to restrictions to check the spread of the coronavirus disease 2019, the government may downgrade its economic growth forecasts for the country this year. PHOTO FROM PNA

“Because of the recent closure of the economy because of the ECQ (enhanced community quarantine) in the NCR Plus, the DBCC might revisit this month the original 6.5 to 7.5 percent [econ growth] forecast,” said Bangko Sentral ng Pilipinas Governor Benjamin Diokno during the Laging Handa Public Briefing on Monday.

“Maybe, based on that result, in my estimate, we might slightly lower the target for this year to around 6 to 7 percent,” he added.

“Our economy is [in a very good] condition prior to the crisis. We expect to recover sometime in 2022, we can go back to where we were before in 2019,” said Diokno.

He said, however, that the pace of the recovery would depend on how fast the government will be able to roll out its vaccination program for the coronavirus disease 2019 (Covid-19).

“We expect that the economy will recover not necessarily in the first quarter but in the second quarter, it will continue to grow,” said Diokno.

Due to the rising number of Covid-19 cases, the government placed NCR, Cavite, Laguna, Bulacan and Rizal under ECQ from March 29 to April 11.

National Economic and Development Authority (NEDA) Acting Secretary Karl Chua earlier said the more stringent quarantine in NCR Plus translates to a daily household income loss of P2.1 billion or almost P30 billion for the two-week period.

He pointed out that all in all, the two-week ECQ may shave off 0.8-percentage point from the country’s full year economic growth in 2021.

NEDA estimates that the two-week ECQ would result in some 252,000 more individuals without jobs and 102,000 more poor individuals.

Sought to comment on the possible revision of economic growth projection, Chua said “we can wait for Q1 (first quarter) data to guide us on this.”

The Philippine economy contracted by 9.6 percent last year due to the combined effects of the Covid-19 pandemic and the eruption of Taal volcano.

The official GDP growth figure for the first quarter of the year will be released next month.