Gross domestic product is now tipped to grow 6% to 7% this year, down from a previous estimate of 6.5%-7.5%, according to the Development Budget Coordination Committee, which sets the government’s economic assumptions for budget purposes. The outlook for 2022 was lowered to 7%-9% growth, from 8%-10% earlier.
Tuesday’s downgrade comes after first-quarter GDP contracted more than expected, cementing the Philippines’ status as one of Asia’s laggards in terms of recovery. Stricter curbs since late March in the capital region and surrounding provinces, the country’s economic backbone, have shuttered businesses and destroyed jobs.
"The effects of the Covid-19 pandemic may remain in the short-term, but we are optimistic that the economy will return to its upward growth trajectory starting this year,” Budget Secretary Wendel Avisado said at a briefing in Manila.
Economies across Southeast Asia are facing an uphill battle as fresh waves of Covid cases threaten recovery prospects. Tougher containment measures from Thailand to Singapore and a slow vaccine rollout continue to weigh on business and consumer confidence.
The peso climbed to its strongest level in more than four years in May, as movement restrictions curb demand for imports. The currency has risen more than 1% in the past three months, among the top performers in Asia.
According to a survey of 33 economists conducted by Bloomberg News this month, the Philippine economy will expand 5.5% in 2021, 6.5% next year and 6.1% in 2023.
"We will continue to manage risks and push for the gradual and safe reopening of the economy after addressing the present spike, so that people can return to work and the government can address hunger and poverty, while maintaining the strict compliance to minimum public health standards,” Avisado said. - Bloomberg