The Department of Finance (DOF) is only expecting a moderate economic recovery in the third-quarter due to reimposition of strict lockdown over Metro Manila and nearby provinces.
While the economy remains in good shape, Finance Secretary Carlos G. Dominguez III admitted that the reimposition of a two-week modified enhanced community quarantine (MECQ) in key areas of Luzon is one-step backward for the country.
The economic recovery is expected to proceed in the third-quarter at a “steady, yet moderate phase,” Dominguez said in a statement.
The finance chief said the MECQ was a “tough” decision by the President, but necessary to further boost healthcare capacity amid a resurge of coronavirus resurge.
“In the short run, the two-week MECQ in Metro Manila and most of Calabarzon this August would negatively affect livelihoods, production and household consumption,” DOF said.
“But if the government and its private sector partners manage to use the two-week timeout to beef up healthcare resources and prevent further COVID-19 spread, the return of the more stringent lockdown measures this month would be positive for the long-term,” it added.
Dominguez said the whole world is learning how to dance with this lethal virus: two steps forward and one step back.
The finance chief, however, assured the government has “the resources necessary” to endure the challenge of COVID-19 and its adverse economic impact, following the first-semester economic contraction of 9.0 percent.
“We are not alone in our struggles, although the unique fiscal and macroeconomic strengths with which we entered 2020 will continue to provide us with solid footing as we confront our economic challenges,” Dominguez said.
The inter-agency Development Budget Coordination Committee (DBCC) now expects the gross domestic product (GDP) to decline by 4.5 percent to 6.6 percent this year, a reversal to the country’s GDP growth rate over the past years.
The new GDP target is significantly higher than DBCC’s earlier assumption of 2.0 percent to 3.4 percent.
Nonetheless, the DBCC remained confident that the country is on track to economic recovery with GDP growth expected to reach 6.5 percent to 7.5 percent in 2021 and 2022.
In the second-quarter, the local economy registered its deepest contraction on record at 16.5 percent.